The anatomy and developmental dynamics of the nerve ring in the hypostome of Hydra oligactis were examined immunocytochemically with an antiserum against a neuropeptide and with neuron-specific monoclonal antibodies. The nerve ring is unique in the mesh-like nerve net of hydra. It is a distinct neuronal complex consisting of a thick nerve bundle running circumferentially at the border between the hypostome and tentacle zone. Immunostaining showed that the nerve ring was heterogeneous and contained at least four different subsets of neurons. During head regeneration and budding, the nerve ring appeared only after the nerve net of ganglion and sensory cells had formed. Every epithelial cell is continuously displaced with neurons toward either head or foot in an adult hydra. However, the ectoderm in the immediate vicinity of, and including, the nerve ring constitutes a stationary zone that is not displaced. Tissue immediately above this zone is displaced toward the tip of the hypostome, while tissue below is displaced along the tentacles. Correspondingly, the production of new neurons in the ring as measured by their differentiation kinetics is much slower than in surrounding areas. Thus, the nerve ring is static and stable in contrast to the dynamic features of the nerve net of hydra.