Phytohormones are involved in the organogenesis of legume root nodules. The source of the auxin indole-3-acetic acid (IAA) in nodules has not been clearly determined. We studied the enzyme aldehyde oxidase (AO; EC 1.2.3.1), that catalyzes the last step of IAA biosynthesis in plants, in the nodules of Lupinus albus and Medicago truncatula. Primordia and young lupin nodules and mature M. truncatula nodules showed AO activity bands after native polyacrylamide gel electrophoresis. Gel activity analyses using indole-3-aldehyde as substrate indicated that the nodules of white lupin and M. truncatula have the capability to synthesize IAA via the indole-3-pyruvic acid pathway. Immunolocalization and in situ hybridization experiments revealed that AO is preferentially expressed in the meristematic and the invasion zones in Medicago nodules and in the lateral meristematic zone of Lupinus nodules. High IAA immunolabeling was also detected in the meristematic and invasion zones. Low expression levels and no AO activity were detected in lupin Fix- nodules that displayed restricted growth and early senescence. We propose that local synthesis of IAA in the root nodule meristem and modulation of AO expression and activity are involved in regulation of nodule development.