A direct product isolation assay for quantifying the formation of 2- and 4-hydroxyestradiol (2-OHE2 and 4-OHE2) from [6,7-3H]estradiol by rabbit hypothalami in vitro was developed, and the assay was used to characterize some properties of estrogen-2- and 4-hydroxylase activity in this tissue. The reaction was carried out under conditions that minimized further metabolism of enzymatically formed catechol estrogens. A simple two-step separation procedure, involving the use of a neutral alumina column, followed by thin layer chromatography, was developed to isolate the enzymatically formed catechol estrogens in a radiochemically homogeneous form. The detergent, Tween-80, was found to activate the enzyme and was used routinely at a concentration of 0.1% in the assay. The formation of 2-OHE2 was linear up to 10 min and with increasing protein concentrations up to 150 micrograms/incubation. Similar values were obtained for 4-OHE2. Maximum velocities (Vmax) for the formation of 2- and 4-OHE2 were 190 and 270 pmol/mg protein . 10 min, respectively. The apparent Km values with respect to estradiol for 2-OHE2 and 4-OHE2 were 125 and 150 microM, respectively. The highest specific activity for the enzyme was present in the 100,000 X g supernatant (S3), while the activity in the microsomal fraction (P3) was less than that in the original homogenate. Enzyme activity depended on the presence of NADPH and oxygen and was inhibited by CO as well as by high concentrations of SKF-525A. Estrogen-2- and 4-hydroxylase activity in rabbit hypothalamus differed from that in rat liver in two respects. In the liver, enzyme activity was localized in the microsomal fraction and was virtually abolished by Tween-80. In contrast, enzyme activity in rabbit hypothalamus was maximal in the soluble fraction (100,000 X g supernatant)and was stimulated by the detergent.