We examined the properties of neuronal NADPH-diaphorase in sections of rat striatum, using histochemical procedures. NADPH-diaphorase histochemistry stained discrete populations of central neurons and provided a Golgi-like image of the neurons exhibiting this activity. The NADPH-diaphorase reaction appeared to be enzyme catalyzed, since it was abolished by pre-treatment with proteases, heat, and acid or alkaline denaturation. Under anaerobic conditions, any tetrazolium salt with a redox potential more positive than NADPH could be reduced by the enzyme. NADPH-diaphorase activity was sensitive to inhibition by sulfhydryl reagents but was unaffected by metal chelators, superoxide dismutase, and catalase. Therefore, the enzyme is unlikely to be a metalloenzyme or to reduce tetrazoliums by producing superoxide anions or hydrogen peroxide. Various analogues of beta-NADPH could be used by the enzyme; however, beta-NADH, which can be used by DT-diaphorase, was ineffective. The enzyme was also resistant to dicumarol, an inhibitor of DT-diaphorase activity. Electron microscopy indicated that the NADPH-diaphorase reaction resulted in staining of various membranous organelles. We conclude that neuronal NADPH-diaphorase is a membrane-bound enzyme distinct from DT-diaphorase and other known enzymes with diaphorase activity. The histochemical characteristics presented here should now enable meaningful biochemical studies of neuronal NADPH-diaphorase to be undertaken.