The role of oxytocin in parturition is controversial. When considered as an endocrine hormone, the balance of evidence suggests that oxytocin has little involvement in the initiation of labour. However, recent research has demonstrated synthesis of mRNA encoding oxytocin within the pregnant human uterus. This article reviews the hypothesis that oxytocin is an important paracrine (or autocrine) hormone with respect to the control of myometrial contractility in late gestation. Experimental data are provided from humans when possible and from studies using the rat as an experimental model. The processing of oxytocin prohormones in uterine tissues is reviewed and the presence and possible role of carboxy-extended forms of oxytocin in late gestational tissues of rats are discussed. The regulation of oxytocin and its receptor, particularly by oestrogen and progesterone, is reviewed. The inter-relationship between oxytocin and prostaglandins is discussed. Finally, the metabolism of oxytocin within intrauterine tissues and the recent development of specific antagonistic analogues to oxytocin are considered. It is concluded that further clarification of this paracrine system within intrauterine tissues during late gestation could lead to more successful strategies for preventing or arresting preterm labour in women.