Establishment of the behavioral significance of oxytocin neurotransmission in the brain has been a leading component in the emerging concept of neuropeptide regulation of behavior. Elucidating the behavioral effects of oxytocin has been facilitated by its profound regulation by estrogen in discrete brain areas and its subsequent role in estrogen-dependent responses. For example, female sexual behavior is estrogen dependent, estrogen markedly increases oxytocin binding in the ventromedial nucleus of the hypothalamus and infusion of oxytocin in this brain area increases female sexual behavior. A similar correlation exists for the role of oxytocin and estrogen in the regulation of maternal behavior. A possible underlying cause of these behavioral effects is that by acting as an anxiolytic, oxytocin reduces the inhibition inherent in social encounters. Behavioral tests in the laboratory frequently involve the exposure of the animal to a novel environment, such as a pup-retrieval apparatus or mating arena, combined with exposure to an unfamiliar conspecific. These stimuli are likely to induce a stress response and perhaps this anxiety is reduced by oxytocin. Recent evidence in mice suggests that oxytocin has anxiolytic properties in estrogen-treated females (McCarthy and Goldman, 1994) and supports the hypothesis that a unifying principal in oxytocin action in the brain is to facilitate social encounters by reducing the associated anxiety.