Using antibodies against peptides derived from different portions of the POMC molecule, immunocytochemical evidence suggests that this precursor and/or the peptides present within it are localized in testicular Leydig cells of at least five species. There is no evidence for the localization of these peptides or their precursor in any other cell type in this organ. Examination of testicular extracts by gel filtration, SDS-PAGE, and RP-HPLC indicate that the testis contains low concentrations of POMC-derived peptides relative to brain. Further analysis indicates that POMC is processed to alpha-MSH and beta-endorphin similar to its processing in intermediate pituitary lobe and brain. The relative mobilities of immunoreactive alpha-MSH and beta-endorphin on RP-HPLC columns indicate that they are in the unacetylated state as in brain and in contrast to the acetylated forms in the intermediate pituitary lobe. The potential for Leydig cells to synthesize POMC and its peptides was suggested by the demonstration of POMC-like mRNA in total testis and Leydig cell cultures. The size of the POMC-like mRNA is approximately 150 base pairs shorter than anterior or intermediate pituitary POMC mRNA. POMC-like mRNA activity has also been localized to Leydig cells in sections of testes using in situ hybridization. Immunostainable beta-endorphin and other POMC-derived peptides are present in testicular Leydig cells during fetal life and following puberty at times when testosterone secretion is maximal. The accumulation of immunostainable POMC-derived peptides in Leydig cells is dramatically increased by LH and hCG. A variety of observations suggests that testicular cells can respond to POMC-derived peptides. ACTH and the MSHs stimulate growth and cAMP accumulation in Sertoli cells. By contrast, studies using antagonists suggested that beta-endorphin and/or another testicular opioid inhibit Sertoli cell proliferation and ABP secretion. These observations are consistent with the postulate that different portions of the POMC molecule may have opposite effects on Sertoli cell function and suggest a mechanism by which Leydig cells could modulate Sertoli cell activity. Intratesticular administration of opiate antagonists inhibits testosterone secretion both in vivo and in vitro. These observations suggest that Leydig cell-derived beta-endorphin may facilitate testosterone secretion either directly or indirectly. The finding of POMC and its derivative peptides in testis, ovary, adrenal, and placenta suggests that all steroid hormone-secreting organs in mammals may utilize this peptidergic system.