Considerable progress has been made in understanding how neural circuits contribute to mental processing and psychiatric disorders. This research has highlighted the importance of network dysfunction, particularly changes in the balance between excitatory and inhibitory transmission within and across brain regions that underlie cognition, emotion, and motivation. Despite progress, the development of new and more effective treatments for psychiatric disorders has lagged considerably, and present pharmacological treatments represent incremental advances over agents introduced decades ago. One approach for identifying novel treatments has involved studies of neuronal stress responses and how these responses are modulated based on the role that stress plays in psychiatric disorders. In this overview, we describe cholesterol-derived agents (called neurosteroids) that are generated endogenously in the brain and that are important modulators of neuronal stress reactions.1 We highlight the potential of these agents as targets for therapeutic drug development in several neuropsychiatric illnesses.