Peroxidase has been investigated as a potential marker protein for the prediction of response to hormonal therapy in tumors of steroid-sensitive tissues, but the cellular origin of the enzyme has been questioned. To localize the observed peroxidase activity, in this study cell subpopulations were isolated from mammary tumors induced by 7,12-dimethylbenz(a)anthracene and from mammary tissue of virgin and lactating female rats. Cells from each of the four cell bands, regularly obtained by isopyknic velocity sedimentation after mechanical and enzymatic dispersion of these tissues, were assayed biochemically and histochemically for peroxidase activity. In addition, cells from each subpopulation were examined at both the light and electron microscopic levels. Elevated enzyme levels were observed in each of the cell subpopulations of 7,12-dimethylbenz(a)anthracene-induced tumors when these were compared with tissue in either of the physiological states assayed. In each tissue type, the levels of peroxidase increased from the lighter cell bands to the heavier cell bands. Light and electron microscopic examination revealed the highest proportion of epithelial cells in the lighter bands and an increase in granulocytes and fibroblasts in the heavier bands, suggesting a nonepithelial contribution. Histochemical examination of intact tissue revealed most peroxidase activity in the stromal compartment with limited activity in parenchymal cells.