The established role of oxytocin (OT) in facilitation of steroid-modulated reproductive and affiliative behaviors led to the speculation that it may have anxiolytic actions under certain hormonal conditions. NIH-Swiss mice were tested for responsiveness to OT in two behavioral tests of anxiety, the holeboard apparatus and elevated plus-maze. Dose-response assessment indicated that 3 mg/kg was the optimal dose for peripherally administered (IP) OT on the elevated plus-maze. There were no consistent effects at any dose on the holeboard apparatus. In ovariectomized mice pretreated with estradiol (E2), peripherally administered OT increased the number of entrances onto the open arms, as well as the amount of time on the open arms compared to other groups (ANOVA; p < 0.05). There was little to no effect of OT in ovariectomized animals not pretreated with E2. When OT was administered intracerebroventricularly (ICV), there was an increase in entrances and time on the open arms compared to that of females infused with arginine vasopressin (AVP). This increase was apparent in ovariectomized females, but was further enhanced in those pretreated with E2 (ANOVA; p < 0.05). In contrast, the combination of E2 pretreatment and ICV AVP decreased the number of entrances and time spent on the open arms of the elevated plus-maze compared to those receiving OT, suggesting an estrogen-modulated anxiogenic action of AVP. Analyses of [125]I-OVTA binding density indicated a significant increase in binding density in the lateral septum of E2-treated females compared to OIL-treated controls (ANOVA; p < 0.05). There was no effect of E2 treatment on [125]I-OVTA binding density in the amygdala or ventromedial nucleus of the hypothalamus. Taken together, these data indicate that OT exerts an anxiolytic action that is enhanced in the presence of circulating estrogen. This behavioral effect may be mediated by estrogen-induced increases in OT binding density in the lateral septum and may be important to the facilitation of social interactions.