Using a somatostatin-gold conjugate of known biological activity, high affinity binding sites for this neuropeptide were visualized at cellular resolution on cultured diencephalic astrocytes and on frozen sections of the rat diencephalon. Binding could be completely suppressed in competition experiments with surplus unlabeled somatostatin. On sections, the ligand was displaced from its binding sites by 10 microM guanosine triphosphate indicating a functional significance of the labeled structures. As with the native peptide, a surplus of the analog SMS 201-995 suppressed nearly all staining. The ligand was bound to distinct populations of astrocytes, namely to those in subependymal and perivascular positions, to astrocytes in somatostatin-innervated hypothalamic nuclei in the mid-sagittal plane and to borderline regions of circumventricular organs. A general mismatch between the distribution of somatostatin-immunoreactive terminals and the pattern of binding of the ligand does not exist. This, together with the competition experiments, suggests a functional relationship between the somatostatin-releasing neurons and associated astrocytes.