Bacterial β‐galactosidase is widely used as a marker for gene expression and in cell tracing experiments. In a survey of three transgenic mouse lines expressing β‐galactosidase in the central nervous system (CNS) under the control of different promotors, we find substantial variation in the intracellular distribution of the lacZ protein. In line MβP5, transgene β‐galactosidase expression is driven by a promoter/enhancer fragment from the oligodendrocyte‐specific myelin basic protein gene; however, electron microscopy of histochemically stained preparations revels transgene expression not only in oligodendrocytes but also in some neurons. Immunofluorescence and immunoperoxidase staining show the β‐galactosidase protein distributed throughout the perikaryal cytoplasm of oligodendrocytes and in processes reaching to myelin sheaths. By contrast, immunoreactive protein appears restricted in neurons to one or a few small perikaryal immunoreactive granules. The granules are visible in the electron microscope as amorphous inclusion bodies of moderate electron density and lack a limiting membrane. Histochemical staining patterns with X‐gal and Bluo‐gal echoed the protein distribution: diffuse distribution of enzyme protein yielded cells filled with substrate, while punctate enzyme distribution yielded restricted or punctate histochemical staining. Examination of two other lines using different promoter/enhancers to drive expression in the CNS showed both diffuse and punctate β‐galactosidase immunolocalization and histochemical staining. The amount of protein synthesized or other properties, yet unidentified, intrinsic to the target cells may determine the intracellular distribution of β‐galactosidase. In retroviral marking studies, clone members have been identified as those cells filled with X‐gal reaction product. This approach may underestimate both clone size and the minimum number of divisions separating the members of each clone. © 1993 Wiley‐Liss, Inc.