Localization of 5'-nucleotidase in the frog retina was investigated using histochemical and cytochemical techniques. Light-microscopic observations revealed the presence of this enzyme in the inner retinal layers (the nerve fiber layer, ganglion cell layer, and inner plexiform layer). Ultrastructural investigations revealed that the enzyme activity is associated with the plasma membranes of the Müller cell processes, whereas the Müller cell processes present in the outer retinal layers did not demonstrate any detectable enzyme activity. This observation would appear to confirm our previous findings, that 5'-nucleotidase is an ectoenzyme, but its distribution in frog retina differs from that in rodents and it is only present in the inner layers of the retina. The prominent localization of 5'-nucleotidase on the glial plasma membrane may be viewed in the context of the widely accepted interaction between neurones and glial cells. Since nucleotides do not penetrate the plasma membrane, a mechanism to produce membrane-permeable adenosine, important for neuronal function, is postulated. It is known that 5'-nucleotidase produces adenosine by hydrolyzing adenosine 5'-monophosphate (5'-AMP). Therefore one would expect that the glial membrane-bound enzyme can accomplish the final step in this mechanism by producing the adenosine in the extracellular spaces.