Tissue-specific alternative splicing profoundly effects animal physiology, development and disease, and this is nowhere more evident than in the nervous system. Alternative splicing is a versatile form of genetic control whereby a common pre-mRNA is processed into multiple mRNA isoforms differing in their precise combination of exon sequences. In the nervous system, thousands of alternatively spliced mRNAs are translated into their protein counterparts where specific isoforms play roles in learning and memory, neuronal cell recognition, neurotransmission, ion channel function, and receptor specificity. The essential nature of this process is underscored by the finding that its misregulation is a common characteristic of human disease. This review highlights the current views of the biological phenomenon of alternative splicing, and describes evidence for its intricate underlying biochemical mechanisms. The roles of RNA binding proteins and their tissue-specific properties are discussed. Why does alternative splicing occur in cosmic proportions in the nervous system? How does it affect integrated cellular functions? How are region-specific, cell-specific and developmental differences in splicing directed? How are the control mechanisms that operate in the nervous system distinct from those of other tissues? Although there are many unanswered questions, substantial progress has been made in showing that alternative splicing is of major importance in generating proteomic diversity, and in modulating protein activities in a temporal and spatial manner. The relevance of alternative splicing to diseases of the nervous system is also discussed.