Vasopressin (AVP) regulates various social behaviors, often in sex-specific ways, including social play behavior, a rewarding behavior displayed primarily by juveniles. Here, we examined whether and how AVP acting in the brain's reward system regulates social play behavior in juvenile rats. Specifically, we focused on AVP signaling in the ventral pallidum (VP), a brain region that is a part of the reward system. First, we examined the organization of the VP-AVP system in juvenile rats and found sex differences, with higher density of both AVP-immunoreactive fibers and AVP V1a receptor (V1aR) binding in males compared to females while females show a greater number of V1aR-expressing cells compared to males. We further found that, in both sexes, V1aR-expressing cells co-express a GABA marker to a much greater extent (approx. 10 times) than a marker for glutamate. Next, we examined the functional involvement of V1aR-expressing VP cells in social play behavior. We found that exposure to social play enhanced the proportion of activated V1aR-expressing VP cells in males only. Finally, we showed that infusion of a specific V1aR antagonist into the VP increased social play behaviors in juvenile male rats while decreasing these behaviors in juvenile female rats. Overall, these findings reveal structural and functional sex differences in the AVP-V1aR system in the VP that are associated with the sex-specific regulation of social play behavior.