The prevailing view of sexual differentiation of mammalian brain is that androgen synthesized in the fetal and neonatal testis and aromatized centrally during a perinatal sensitive period is the sole source of brain estradiol and the primary determinant of sex differences. Subregions of the diencephalon are among the most sexually dimorphic in the brain, and there are well-established sex differences in the amount of testosterone and estradiol measured in the hypothalamus and preoptic area during the perinatal period. We previously reported unexpectedly high estradiol in the hippocampus and cortex of both male and female newborn rat. This prompted a thorough investigation of the developmental profile of steroids in the rat brain using RIA to quantify the level of estradiol, testosterone, and dihydrotestosterone in discrete subregions of the brain from embryonic d 19 to adulthood. Plasma estradiol levels from individual animals were assessed when sufficient sample was available. A significant sex difference in hypothalamic testosterone prior to birth was consistent with previous findings. Postnatally, there was a distinct pattern of changing steroid concentrations in each brain region, and these were unrelated to circulating steroid. Removal of the gonads and adrenals at birth did not significantly reduce steroids in any brain region assayed 3 d later. Aromatase activity was detectable in all brain areas at birth, and the difference in activity level paralleled the observed regional differences in estradiol content. Based on these findings, we propose that steroidogenesis in the brain, independent of peripherally derived precursors, may play a critical role in mammalian brain development of both sexes, beyond the establishment of sex differences.