The production of α-amidated peptide hormones from their glycine-extended precursors is catalyzed by the specific enzyme peptidylglycine α-amidating monooxygenase (PAM). In the present study, the distribution and subcellular localization of PAM activity in the sheep brain was examined and compared with known sites of amidated peptide synthesis and release. Of the brain regions assayed, the preoptic anterior and medial basal areas of the hypothalamus contained the greatest concentration of amidating activity. Lower concentrations (>3-fold less) were found in the anterior and neurointer-mediate pituitary, median eminence, cerebral cortex, hippocampus, pons-medulla, and brainstem. Very low amounts of activity were present in the cerebellum and pineal gland. In most tissues tested, PAM activity was 40-75% higher in the membrane-associated fraction than in the soluble fraction. In the hypothalamus, affinity constants were identical for both membrane-associated and soluble fractions, and ranged from 12.3-13.3 µM. Maximal velocity was higher in the membrane fraction (4.7-4.8 pmol/µg/h) than in the soluble fraction (2.6-2.9 pmol/µg/h). Levels of amidating activity in hypophysial-portal and jugular plasma were similar and were 20- to 25-fold lower than in hypothalamic extracts. Insulin-induced hypoglycemia did not significantly alter PAM levels in portal or peripheral plasma, suggesting that amidating activity is not released during this stress. These results indicate that the hypothalamus is the richest source of amidating activity in the sheep brain, and suggest that amidation of neurohypophysial and hypothalamic releasing peptides may occur before axonal transport, given the much lower levels in median eminence, neurointermediate pituitary, and portal plasma.