Differential and density gradient centrifugation techniques have been employed to study the intracellular distribution of phosphodiesterases I and II in rat liver, using as specific substrates the p‐nitrophenyl esters of thymidine‐5′‐phosphate and thymidine‐3′‐phosphate. Some of the results for phosphodiesterase I were also examined with the use of a 5′‐terminated DNA core as substrate. Phosphodiesterase I was found to be largely (>80%) localized in the plasma membrane, whereas purified nuclei, rough microsomes, and the inner mitochondrial membrane are essentially free of this enzyme. The possible sources of apparent phosphodiesterase I activity of the outer mitochondrial membrane, the lysosomes and the smooth microsomal membrane are discussed. Phosphodiesterase II is localized largely in the soluble fraction of the lysosomes, and exhibits the latency typical of lysosomal hydrolases. The overall findings are examined in relation to those of other investigators. Possible reservations regarding the absolute specificities of the substrates employed, and their bearing on the localization results, are discussed. Copyright © 1969, Wiley Blackwell. All rights reserved