Numerous reports, ranging from molecular investigations to clinical studies, demonstrate the potency of estrogens to modulate brain function and their implications in schizophrenia and depression. Alterations of dopaminergic, cholinergic, GABAergic, glutamatergic and serotonergic neurotransmission through estrogen-mediated mechanisms have been consistently established. Moreover, studies using in vivo and in vitro models as well as epidemiological data suggest that estrogens provide neuroprotection of central nervous system (CNS) cells implicated in the etiology of neurodegenerative disorders such as Alzheimer s (AD) and Parkinson s (PD) diseases. Numerous genomic or non-genomic mechanisms of actions of estrogens in the brain have been documented implicating classical nuclear estrogen receptors as well as possible estrogen membrane receptors, antioxidant activity of steroids, their effect on fluidity as well as on antiapoptotic proteins and growth factors. Selective estrogen receptor modulators (SERMs) have estrogenic and/or antiestrogenic activity depending on the target tissue. Hence, SERMs have the same beneficial effect as estrogen in skeleton and cardiovascular systems but act as antagonists in breast and uterus. The finding of beneficial side effects of SERMs in the CNS might improve their risk-benefit ratio in traditional indications. In this review, we will survey schizophrenia and depression as examples of mental diseases and AD and PD as neurodegenerative diseases. We will review brain effects of estrogens, steroids possibly acting as pro-drugs of estrogens such as testosterone and dehydroepiandrosterone (DHEA) and present novel findings with SERMs. Drugs with estrogen activity in the brain may have therapeutic potential either by modulating brain neurotransmitter transmission or through neuroprotective activity.