The opioid peptides have profound effects at several levels within the hypothalamo-pituitary-adrenal (HPA) axis. Activation of fetal HPA function occurs during late gestation, and as part of the fetal adaptive response to stress. Changes in the relative levels, localization and distribution of hypothalamic preproenkephalin (PENK) mRNA in the ovine hypothalamic paraventricular nucleus (PVN) during development were examined by in situ hybridization histochemistry. The effects of fetal hypoxemia applied in the presence or absence of concomitant cortisol, to establish negative feedback potential in late gestation were also investigated. PENK mRNA was present at low levels within the PVN, by d60 (term d147). During mid to late gestation, there was an increase in PENK mRNA levels from d60-80 to d100-120, then reaching a peak at d130-140. Levels then decreased dramatically during the last 5-7 days prior to parturition, but increased again in the newborn lamb. Throughout gestation, PENK mRNA was confined exclusively to the parvocellular region of the PVN. Cortisol infusion induced significant decreases (P < 0.05) in PENK mRNA, in normoxemic fetuses at d135 of gestation. The hypoxemic insult, which is known to stimulate plasma ACTH and cortisol, in these fetuses, did not significantly affect PENK mRNA. There was no significant difference in hypoxemia significantly decreased PENK mRNA compared to the saline-infused normoxemic fetuses. Together, these results indicate that the elevation of endogenous fetal cortisol, that occurs at the end of gestation, may act to inhibit expression of the PENK gene in the hypothalamic PVN of the developing ovine fetus.