The interpeduncular nucleus (IPN) is a midbrain structure that receives its major afferents from the medial habenulae via the fasciculi retroflexi. Among the axons projecting to the IPN is a population of substance P (SP)-containing axons. The IPN has been subdivided into the central, dorsal, intermediate, rostral, and lateral subnuclei using cytoarchitectonic criteria. The distribution of SP among these subnuclei was determined by using Sternberger's ('79) peroxidase-antiperoxidase technique. In the normal IPN the rostral subnucleus can be subdivided into two sectors on the basis of SP content. The ventral sector contains a moderate amount of SP and scattered SP positive perikarya. The dorsal cap of the rostral subnucleus contains denser SP than the ventral sector and it is continuous with the SP found in the dorsal subnucleus. The lateral subnuclei contain the densest SP found in the IPN and appear as laterally placed columns that expand in size caudally. The central and intermediate subnuclei contain very sparse SP. The fasciculus retroflexus was destroyed in 30 animals unilaterally or bilaterally and animals were perfused 4 days to 3 months postoperatively. After unilateral fascicular lesion, the SP in the rostral part of the ipsilateral lateral subnucleus is almost abolished, but caudally the decrease is confined to its lateral aspect. There is no visible decrease contralateral to the lesion. SP in the rostral part of the cap of the rostral subnucleus is decreased ipsilaterally but no loss is seen contralaterally or caudally. Animals with bilateral lesions show a great decrease in staining in the dorsal cap of the rostral subnucleus and the lateral subnuclei, with no decrease seen in the central, dorsal, or intermediate subnuclei. These results confirm that the origin of most of the SP in the IPN is fasciculus retroflexus fibers, but some of the SP arises from intrinsic SP perikarya located in the ventral sector of the rostral subnucleus and some may also arise from other sources. The areas of the IPN that receive bilateral SP projections from the fasciculus retroflexus (parts of the lateral and rostral subnuclei) show evidence for replacement of SP after lesion. This replacement implies sprouting or an increase in production of SP by remaining systems.