Neuroactive steroids rapidly modulate gamma-aminobutyric acid (GABA) and glutamate receptors. GABA-enhancing steroids have potential clinical utility as anesthetics, hypnotics, anticonvulsants and anxiolytics. Furthermore, GABAergic neurosteroids may participate in regulating mood and the effects of alcohol on the nervous system, suggesting a potential role in major psychiatric disorders. Neuroactive steroids that alter the function of glutamate receptors could be useful for treating neurodegenerative disorders, and as cognitive enhancers. Recent progress in developing water-soluble steroids and steroids with enhanced oral efficacy foster optimism that certain neuroactive steroids will be developed for clinical use.