In everyday life, vestibular receptors are activated by both self-generated and externally applied head movements. Traditionally, it has been assumed that the vestibular system reliably encodes head-in-space motion throughout our daily activities and that subsequent processing by upstream cerebellar and cortical pathways is required to transform this information into the reference frames required for voluntary behaviors. However, recent studies have radically changed the way we view the vestibular system. In particular, the results of recent single-unit studies in head-unrestrained monkeys have shown that the vestibular system provides the CNS with more than an estimate of head motion. This review first considers how head-in-space velocity is processed at the level of the vestibular afferents and vestibular nuclei during active versus passive head movements. While vestibular information appears to be similarly processed by vestibular afferents during passive and active motion, it is differentially processed at the level of the vestibular nuclei. For example, one class of neurons in vestibular nuclei, which receives direct inputs from semicircular canal afferents, is substantially less responsive to active head movements than to passively applied head rotations. The projection patterns of these neurons strongly suggest that they are involved in generating head-stabilization responses as well as shaping vestibular information for the computation of spatial orientation. In contrast, a second class of neurons in the vestibular nuclei that mediate the vestibuloocular reflex process vestibular information in a manner that depends principally on the subject's current gaze strategy rather than whether the head movement was self-generated or externally applied. The implications of these results are then discussed in relation to the status of vestibular reflexes (i.e., the vestibuloocular, vestibulocollic, and cervicoocular reflexes) and implications for higher-level processing of vestibular information during active head movements.