Although the observation that the brain can form estrogens from androgens was made nearly 25 years ago, the details and implications of this autocrine/paracrine neuroendocrine system are still being discovered. The presence in the brain of the enzyme estrogen synthetase (aromatase) has been documented by biochemical, molecular biologic and morphologic techniques. The system has been shown to be autoregulating--i.e., brain aromatase is induced by the same androgens that it uses as the substrate for the formation of estrogens. Aromatase was first found in the hypothalamus and associated with reproductive neuroendocrine development (the aromatase hypothesis of brain sexual differentiation); however, recent immunohistochemical studies have indicated that aromatase is more widely spread throughout the brain. There apparently are two, separable brain aromatase systems in mammals, a gonad-sensitive hypothalamic system and a gonad-insensitive limbic system. These systems appear during prenatal development and are also found in adults. The aromatase is distributed throughout the neuron, including projective fibers: axons, boutons and synaptic vesicles. Thus, additional actions of locally formed estrogen in these areas of the brain and beyond are likely to be found in the near future.