A recently developed histochemical technique to demonstrate xanthine oxidase activity in milk globules of bovine mammary gland and in epithelial cells of rat small intestine using cerium ions and a semipermeable membrane was slightly modified. The semipermeable membrane method was replaced by the addition of 10% (w/v) polyvinyl alcohol to the incubation medium. This technically more simple procedure enabled detection of xanthine oxidase activity in unfixed cryostat sections of rat liver. Both methods gave qualitatively and quantitatively similar results. Activity was found in sinusoidal cells and in liver parenchymal cells, with 50% higher activity in pericentral than in periportal areas. The specificity of the reaction was proven by the generation of only small amounts of final reaction product on incubation either in the absence of the substrates hypoxanthine or oxygen or in the presence of hypoxanthine and allopurinol. Allopurinol is a specific inhibitor of xanthine oxidase activity. The amount of final reaction product, as measured cytophotometrically in rat liver, increased linearly with incubation time (15-90 min) and with section thickness (up to 12 microns). By varying the hypoxanthine concentrations, a Km value of 0.05 mM was found. Addition of dithiothreitol to the incubation medium reduced the amount of final reaction product by 85%, which was caused by conversion of reversible xanthine oxidase into xanthine dehydrogenase. This histochemical method can be used for quantitative analysis of in situ xanthine oxidase activity.