Brain monoamines, and serotonin in particular, have repeatedly been shown to be linked to different psychiatric conditions such as depression, anxiety, antisocial behaviour, and dependence. Many studies have implicated genetic variability in the genes encoding monoamine oxidase A (MAOA) and the serotonin transporter (5HTT) in modulating susceptibility to these conditions. Paradoxically, the risk variants of these genes have been shown, in vitro, to increase levels of serotonin, although many of the conditions are associated with decreased levels of serotonin. Furthermore, in adult humans, and monkeys with orthologous genetic polymorphisms, there is no observable correlation between these functional genetic variants and the amount or activity of the corresponding proteins in the brain. These seemingly contradictory data might be explained if the association between serotonin and these behavioural and psychiatric conditions were mainly a consequence of events taking place during foetal and neonatal brain development. In this review we explore, based on recent research, the hypothesis that the dual role of serotonin as a neurotransmitter and a neurotrophic factor has a significant impact on behaviour and risk for neuropsychiatric disorders through altered development of limbic neurocircuitry involved in emotional processing, and development of the serotonergic neurons, during early brain development.