The pineal gland has a major role in the translation of scotophase duration into a hormonal signal by the hormone melatonin. Animals such as sheep, goats and deer use the seasonal variation of this signal to coordinate reproductive behaviour with the environment. Despite intensive research over more than 30 years the site(s) of action of melatonin and the resultant intracellular responses are still not clear. This review discusses recent work that has localized the site of action of melatonin in sheep using administration into the hypothalamus in vivo as well as studies on putative melatonin receptors in the pars tuberalis and brain. There is clear evidence that melatonin acting at the level of the pars tuberalis is involved in the seasonal regulation of prolactin secretion, but the evidence for involvement of the pars tuberalis in seasonal reproduction is not compelling. Localized administration of melatonin to the sheep brain revealed that areas anatomically distinct from the pars tuberalis, the ventromedial and arcuate nuclei, simulated seasonal reproductive changes in rams and ewes. Recent studies on brain melatonin binding sites in our laboratory have shown that an antagonist of tissue transglutaminase, Bacitracin, as well as substrates for the enzyme inhibit binding of melatonin to brain membranes. As a working hypothesis, we propose that pineal melatonin secretion alters seasonal reproduction by interactions with a neural transglutaminase at the synapse of neurones involved in the control of GnRH secretion. Synaptic transglutaminase is implicated in the control of the release of neurotransmitter via the synaptic vesicle associated protein, synapsin 1; activation of transglutaminase results in the covalent modification of synapsin 1 such that vesicles are not released from the cytoskeleton. Seasonal variation in the duration of melatonin secretion may result in similar variations in the duration of suppression and activation of transglutaminase. The resultant changes in transmitter release may then be responsible for the seasonal neuronal plasticity previously observed in GnRH neurones.