The sagittalis nucleus (SGN) of the hypothalamus is a newly-identified nucleus that is located in the interstitial area between the arcuate and ventromedial nuclei of the rat hypothalamus and for which the long axis of the nucleus is oriented sagittally. Interestingly, the SGN exhibits structural and physiological sex differences, as defined by Nissl staining and oestrogen receptor (ER)alpha immunoreactivity (-ir), being larger in males than females. The structural sex difference is established by sex steroid action in neonates because the treatment of female pups with testosterone propionate masculinised the SGN. The phenotypical sex difference in ERalpha-ir is mediated hormonally in adulthood. Ovariectomy of female rats caused a significant increase in ERalpha-ir in the SGN, and eliminated the physiological sex difference, but with recovery to the level of gonad-intact females when given oestradiol replacement. Adult females have oestrous cycle-related variations in ERalpha-ir in the SGN, with levels at a nadir during the evening of pro-oestrous. The discovery of the SGN, a target of sex steroid action, provides a new opportunity for explaining hormonal regulation of sexually-differentiated behavioural and endocrine functions.