A pharmacohistochemical procedure to demonstrate histochemically those cells with the ability to synthesize the GABA-metabolizing enzyme GABA-transaminase has been applied to determine the localization of this enzyme in the basal ganglia. In normal, pharmacologically unmanipulated animals, strong GABA-transaminase activity is present throughout the neuropil in many nuclei of the basal ganglia. The striatum, globus pallidus, entopeduncular nucleus, subthalamic nucleus and substantia nigra are all heavily stained. White matter such as the corpus callosum and internal capsule are unstained. Pretreatment of rats with the irreversible GABA-transaminase inhibitor ethanolamine-O-sulfate resulted in a marked reduction in the general neuropil staining. At a suitable post-injection survival time, cells which had synthesized new GABa-transaminase molecules could be detected. Small, positive neurons were present in the striatum and entopeduncular nucleus, while the globus pallidus, substantia nigra zona reticulata, and the ventral pallidal region contained many large, intensely GABA-transaminase-positive neurons. The results indicate that much of the GABA-transaminase in the basal ganglia is neuronal in origin. The relationship of GABA-transaminase to GABA neurons is discussed.