N-acetyl-l-aspartate (NAA) is an important osmolyte in the vertebrate brain and eye, and its cyclical metabolism is accomplished in two separate compartments. In the brain, NAA is synthesized primarily in neurons, and after its regulated release, NAA is hydrolyzed by aspartoacylase, which is present in a glial-associated compartment. However, the precise nature of this hydrolytic compartment has remained obscure. It has been proposed that one role of aspartoacylase in the central nervous system (CNS) is as part of a molecular water pump (MWP) that uses the NAA intercompartmental cycle to remove nerve cell metabolic water against a water gradient and that oligodendrocytes comprise the second compartment in this metabolic sequence. The absence of aspartoacylase activity in Canavan disease (CD), a rare early onset genetic spongiform leukodystrophy, is associated with CNS edema, intramyelinic swelling and a progressive loss of oligdendrocytes. In order to evaluate the MWP hypothesis and its possible relationship to the etiology of CD further, both oligodendrocytes and astrocytes obtained from neonatal rat brain were grown in culture and tested for the presence of aspartoacylase activity. The results of this study show for the first time that aspartoacylase activity is expressed only in oligodendrocytes. The meaning of this observation in understanding the function of the NAA metabolic cycle is discussed.