Light and electron microscopic immunocytochemical techniques were used to study the effect of glucocorticoids on the development of phenylethanolamine-N-methyltransferase (PNMT)-immunoreactive cells in the superior cervical ganglion (SCG) of early postnatal rats. Rats were injected daily with hydrocortisone acetate on postnatal days 2-6. The first PNMT-immunoreactive cells were detected 6 hours after the first glucocorticoid injection and their number increased after subsequent injections. No PNMT-immunoreactive cells were detected in uninjected controls. PNMT-immunoreactive fibres were seen in the ganglion 6 hours after the first glucocorticoid injection. The PNMT-immunoreactive cells consistently showed processes 2 days after beginning the glucocorticoid treatment, and long processes and fibre networks were seen in ganglia of 7-day-old rats. However, no PNMT-immunoreactive fibres were seen in the iris, which is innervated by the SCG. Ultrastructurally, most of the PNMT-immunoreactive cells had the look of small granule-containing (SGC) cells, including heterochromatin clumps along the nuclear envelope and in the center of the nucleoplasm as well as dense core vesicles. SGC cells, nonimmunoreactive to PNMT antiserum, also were seen. However, some PNMT-immunoreactive cells showed ultrastructural characteristics of nerve cells. In contrast to the SGC cells, these cells were characterized by a voluminous cytoplasm, dispersed nuclear heterochromatin, and a lack of granular vesicles. These results demonstrate that glucocorticoids induce PNMT immunoreactivity both in SGC cells and also in cells with characteristics of principal neurons.