Cerebral reserve capacity (or functional reserve) refers to the brain's ability to maintain function when confronted by degenerative processes. Functional reserve can be estimated by several associated measures, including premorbid brain size, premorbid IQ, and level of education attained. There is accumulating evidence that the magnitude of reserve capacity is important in determining the onset and progression of the clinical manifestations of neurodegenerative brain diseases. Normal aging also whittles away at this cerebral reserve, and there may be a consequent unmasking of morbid effects that was not clinically evident when this compensatory reserve was sufficient. We review the evidence supporting this model for a number of degenerative brain processes, including Alzheimer's disease, presenile dementia, HIV dementia, aging, and chronic (multiyear) substance abuse. The concept of cerebral functional reserve has important implications for alcohol and drug abuse morbidity. First, given the high genetic contribution to substance abuse, there is an increased likelihood that the parents of substance abusers were substance abusers themselves. Substance abuse during pregnancy can inhibit brain growth, resulting in reduced brain size and reduced reserve capacity (and therefore less ability to compensate for loss of function later in life). Second, substance abuse is often coupled with poverty, and both substance abuse and poverty are associated with some of the same conditions that reduce brain growth. Finally, we comment on the most important public health implication of the cerebral reserve capacity model (vis-à-vis addiction).