Steroids influence neuronal function through binding to intracellular receptors, which may act as transcription factors in the regulation of gene expression. In addition, certain so-called neuroactive steroids are potent modulators of an array of ligand-gated ion channels and of distinct G-protein-coupled receptors via nongenomic mechanisms. Neuroactive steroids may modulate an array of neurotransmitter receptors and regulate gene expression. This intracellular cross-talk between genomic and nongenomic steroid effects provides the basis for their neuropsychopharmacological potential with regard to both clinical effects and side effects. These compounds may influence sleep and memory. Moreover, they may play a role in the response to stress and the treatment of neuropsychiatric disorders, such as epilepsy, depression, and anxiety disorders. Neuroactive steroids affect a broad spectrum of behavioral functions through their unique molecular properties and may constitute an unexploited class of drugs. However, particular attention must be drawn to putative side effects that are inherent to their molecular diversity. Moreover, it must be determined whether synthetic steroid compounds really offer an advantage over already known drugs and whether the modulation of endogenous neuroactive steroids might constitute a useful alternative strategy for pharmacological intervention.