The neuropeptide oxytocin (OT) modulates social behaviours and is an important anxiolytic substance of the brain. However, sites of action and the intracellular signalling pathways downstream of OT receptors (OTR) within the brain remain largely unknown. In the present studies, we localized the anxiolytic effect of OT by bilateral microinfusion of OT (0.01 nmol/0.5 µL) into the hypothalamic paraventricular nucleus (PVN) in male rats using both the elevated plus-maze and the light–dark box. Moreover, intracerebroventricular administration of OT, but not of the related neuropeptide vasopressin (VP), dose-dependently activated the extracellular signal-regulated kinase 1/2 (ERK1/2) cascade. Specifically, OT induced the phosphorylation of Raf-1, MEK1/2 and ERK1/2 in the hypothalamus in vivo and in hypothalamic H32 neurons via EGF receptors. OT-induced ERK1/2 phosphorylation was immunohistochemically localized within VP neurons of the PVN and the supraoptic nucleus. Importantly, the anxiolytic effect of OT within the PVN was prevented by local inhibition of the MAP kinase cascade with a MEK1/2 inhibitor (U0126, 0.5 nmol/0.5 µL) locally infused prior to OT, indicating the causal involvement of this intracellular signalling cascade in the behavioural effect of OT. OT effects within the hypothalamus may have far-reaching implications for the regulation of emotionality and social behaviours and, consequently, for the development of possible therapeutic strategies to treat affective disorders. Thus, OTR agonism or activation of the ERK1/2 cascade, specifically within the hypothalamus, may provide therapeutically relevant mechanisms.