Neurones immunoreactive to an antibody against a pigment-dispersing hormone (PDH-ir) are considered to be pacemaker cells in the neuronal circadian system of flies. We investigated the ultrastructure of PDH-ir varicosities, possible releasing sites of the PDH-like peptide, in the distal medulla of the optic lobe and in the dorsal protocerebrum of the two fly species Drosophila melanogaster and Musca domestica. In both species PDH-ir varicosities show accumulation of dense core vesicles (DCVs). PDH-like peptide is localized in the DCVs as shown by post-embedding immuno-electron microscopy. Localization of PDH-like peptide in DCVs and normally lacking synaptic specializations at PDH-ir varicosities in the medulla are interpreted as a non-synaptic paracrine release of peptide.