The present study was designed to evaluate the effects of ethanol, testosterone and combination of ethanol and testosterone, on spatial reference memory and β-endorphin (β-EN) levels in castrated rats. Male Sprague-Dawley rats (120–150 g) were used in this study, Animals were castrated and ethanol, testosterone or combination of the drugs were administered to rats at 09:00 h. The drugs were administered after a training period of 5 days and spatial reference memory was evaluated for 7 days using the Morris water maze. One hour after the last injection, animals were sacrificed, their brains removed and dissected into cortex, hypothalamus, hippocampus and midbrain. The β-EN levels in these brain regions were determined by radioimmunoassay. The time to find the platform (latency period) was significantly increased in ethanol-treated rats, indicating that ethanol induces deficit in spatial reference memory. On the other hand, testosterone administration improved spatial reference memory by significantly decreasing the latency period. In addition, there was a significant decrease in latency period in the animals treated with combination of ethanol and testosterone. Results also indicate that administration of ethanol resulted in a significant increase in β-EN levels in the hippocampus and in the cortex while concurrent administration with testosterone abolished this increase. These findings clearly indicate that administration of testosterone did not only improve memory but also abolished the spatial memory deficit induced by ethanol in castrated rats.