N2O stimulates an NO‐dependent release of endogenous opioid peptides to induced antinociception in rodents (Emmanouil & Quock, Anesth. Prog. 54:9–18, 2007). The present study was carried out to determine whether the arcuate nucleus was the brain site of action of N2O. Male Sprague Dawley rats, 250–300 g, were stereotaxically implanted with microdialysis probes in the arcuate nucleus. Exposure to 70% N2O increased dialysate levels of NOx as well as β‐EP, compared to levels in fractions collected under room air. Pretreatment of rats with the NOS‐inhibitor L‐NAME prior to N2O exposure antagonized the increases in both NO metabolites and β‐EP. In other rats that were stereotaxically implanted with intracerebral microinjection cannulae, pretreatment with naltrexone in the periaqueductal gray (PAG) but not the arcuate nucleus antagonized N2O‐induced antinociception in the rat hot plate test. These findings indicate a functional link between increased NO activity and neuronal release of β‐EP in response to N2O and support our hypothesis that β‐EP released from the arcuate nucleus is carried to the PAG to cause antinociception. (Supported by State of Washington Initiative Measure No. 171.)