Estrogens are hormones that modulate a diverse array of effects during development and adulthood. The effects of estrogen are mediated by two estrogen receptor (ER) isotypes, ERa and ERa, which classically function as transcription factors to modulate specific target gene expression and in addition regulate a growing list of intracellular signaling cascades. These receptors share protein sequence homology and protein-motif organization but have distinct differences in their tissue distribution and binding affinities for their ligands. In the nervous system estrogen has been implicated to play a role in a number of processes which regulate synaptic plasticity including synaptogenesis and neurogenesis. The role for estrogen in a range of neurological and neuropsychiatric diseases is also becoming very apparent. Estrogen is able to regulate processes and behaviours relevant for both Alzheimers disease and schizophrenia and to modulate neuroendocrine and inflammatory processes important in neuroinflammation, anxiety and depressive disorders as well as chronic pain. We will consider the rationale for estrogen-based therapies for diseases of the nervous system. In particular we will highlight the molecular mechanisms and signal transduction pathways most likely underlying the effects of estrogen in the CNS.