It was investigated whether there is an endogenous factor in the brain which binds to the opiate receptor in neural tissue. Extracts from rat brain were processed in different ways; fractions were assayed for ability to inhibit the receptor binding of dihydromorphine. There was no evidence for high-molecular weight substances or lipid soluble substances with such ability. On the other hand, processing of an acid water extract of brain except the cerebellum (which was negative) yielded an active fraction with receptor blocking activity. This fraction was heat stable, polyionic and had an apparent molecular weight of 1000–1200 dalton. These and other characteristics indicate that it might well be a peptide. The factor inhibited binding to the opiate receptor in synaptic plasma membranes of rat brain and to the receptor of the guineapig ileum although it was less effective on the latter, particularly after long-term incubation. The interaction between the factor and dihydromorphine was reversible and apparently competitive.