Cerebrospinal fluid dynamics were studied in eight dogs during normal, hydrocephalic, and postoperative phases. Radionuclide-labeled substances introduced into the normal ventricular system flow out of the exits from the fourth ventricle to the convexity subarachnoid spaces superiorly to be absorbed in the sagittal sinus, and basorostrally to the exits from the perineural olfactory sheath into the nose to produce physiological cerebrospinal fluid (CSF) rhinorrhea. Serial radionuclide ventriculography of the head following intraventricular isotope injection of labeled proteins and chelate into the kaolin-induced hydrocephalic system shows a high degree of ventricular stasis with no perineural olfactory nerve flow (rhinorrhea). An operative transcerebral fistula, fashioned from a dilated lateral ventricle to the convexity subarachnoid space, reestablishes perineural olfactory flow of CSF into the nose, as demonstrated by the radionuclide ventriculography studies. This suggests a potential method for treatment of hydrocephalus. Serial imaging studies in this surgically modified system clearly demonstrate radionuclide flow through the patent fistula to distal absorption sites, thereby bypassing the basal obstruction. Moreover, augmented CSF pressures associated with obstructive hydrocephalus can be controlled by such treatment. The application of this method in treating clinical hydrocephalus is discussed with emphasis on fistula arachnoid closure to assure fistula patency.