Sex differences in the metabolism of testosterone (T) in the developing brain of quail were examined using an in vitro microassay. During each developmental stage (day before hatching, hatching and 2 days after hatching) aromatase activity was higher in hypothalamic areas than in a control neostriatal area. There was no sex difference in oestradiol-17 beta (E2) formation in the late embryonic brain or at hatching. But aromatase activity in the male preoptic-anterior hypothalamic area was 50% higher than in females by day 2. No regional differences in brain 5 beta-reductase activity were detected at any of the developmental stages sampled. There was a sex difference in production of catabolic 5 beta-reduced metabolites. Male 5 beta-reductase activity declined continuously from high embryonic levels in all areas, whereas female enzyme activity showed an increase at hatching. In contrast to plasma progesterone, levels of T were higher in the male than in the female by day 1 after hatching. We suggest that elevated circulating T in the male after hatching may account for the sexual dimorphism in brain aromatase activity.