Neurosteroids are still found in the brain after steroidogenic glands were removed, indicating that they are synthesized either de novo or from endogenous precursors by enzymes present in the CNS. In fact, steroidogenic acute regulatory protein, and aromatase, two molecules essential for estrogen synthesis, are expressed in the hippocampus. We recently showed, for the first time, that estrogens are synthesized de novo in hippocampal neurons and that these hippocampus-derived estrogens are essential for synaptic plasticity. Both estrogen receptor isoforms, estrogen receptor alpha and estrogen receptor beta, are expressed in the hippocampus, and estradiol treatment of the cultures leads to an upregulation of estrogen receptor alpha. This finding confirmed the presence of functional estrogen receptors in hippocampal neurons and showed the responsiveness of the cultured hippocampal neurons to estradiol. By using letrozole, an inhibitor of aromatase, estradiol levels in hippocampal dispersion cultures as well as in hippocampal slice cultures were significantly suppressed which in turn led to a downregulation of estrogen receptor alpha. Letrozole treatment was followed by a significant decrease in the density of spines and spine synapses and in the number of presynaptic boutons. Quantitative immunohistochemistry revealed a dose-dependent downregulation of spinophilin, a spine marker, and of synaptophysin, a presynaptic marker, and of growth-associated protein 43 after letrozole treatment. Our data provide strong evidence for estrogens being potent modulators of structural synaptic plasticity and point to a paracrine rather than endocrine mechanism of estrogen action in the hippocampus.