125I-Melatonin was used to localize and characterize the melatonin receptor sites in the rat hypothalamus. Autoradiography revealed that displaceable 125I-melatonin binding occurred in suprachiasmatic nuclei and median eminence only. Further studies performed on crude membrane fractions from median eminences revealed high affinity (Kd = 21 pM) melatonin binding sites (Bmax = 8.5 fmol/mg protein). The order of potency of various indole amines to inhibit 125I-melatonin binding was melatonin much greater than N-acetyl-5-hydroxytryptamine greater than 5-methoxytryptamine greater than 5-hydroxytryptamine.