Detailed neuroanatomical studies of model species are necessary to facilitate comparative experiments which test hypotheses relevant to brain evolution and function. Butterflyfishes (Chaetodontidae) boast numerous sympatric species that differ in social behavior, aggression and feeding ecology. However, the ability to test hypotheses relevant to brain function in this family is hindered by the lack of detailed neural descriptions. The cytoarchitecture of the telencephalon in the monogamous and territorial multiband butterflyfish, Chaetodon multicinctus, was determined with Nissl-stained serial sections and an immunohistochemical analysis of arginine vasotocin (AVT), serotonin, substance P and tyrosine hydroxylase. The ventral telencephalon was similar to that of other perciform fishes studied, with one major difference. A previously undescribed postcommissural region, the cuneate nucleus, was identified and putatively assigned to the ventral telencephalon. While the function of this nucleus is unknown, preliminary studies indicate that it may be part of a behaviorally relevant subpallial neural circuit that is modulated by AVT. The dorsal telencephalon consisted of 15 subdivisions among central, medial, lateral, dorsal and posterior zones. Several regions of the dorsal telencephalon of C. multicinctus differed from many other perciform fishes examined thus far. The nucleus taenia was in a more caudal position, and the central and lateral zones were enlarged. Within the lateral zone, an unusual third, ventral subdivision and a large-celled division were present. One hypothesis is that the enlarged ventral subdivision of the lateral zone (potential hippocampus homolog) relates to an enhancement of spatial learning or olfactory memory, which are important for this coral reef fish. This study provides the neuroanatomical basis for future comparative and evolutionary studies of brain organization and neuropeptide distributions, physiological studies of neural processing and insight into the complex social behavior of butterflyfishes.