Progesterone (PROG) is synthesized in the brain, spinal cord and peripheral nerves. Its direct precursor pregnenolone is either derived from the circulation or from local de novo synthesis as cytochrome P450scc, which converts cholesterol to pregnenolone, is expressed in the nervous system. Pregnenolone is converted to PROG by 3beta-hydroxysteroid dehydrogenase (3beta-HSD). In situ hybridization studies have shown that this enzyme is expressed throughout the rat brain, spinal cord and dorsal root ganglia (DRG) mainly by neurons. Macroglial cells, including astrocytes, oligodendroglial cells and Schwann cells, also have the capacity to synthesize PROG, but expression and activity of 3beta-HSD in these cells are regulated by cellular interactions. Thus, Schwann cells convert pregnenolone to PROG in response to a neuronal signal. There is now strong evidence that P450scc and 3beta-HSD are expressed in the human nervous system, where PROG synthesis also takes place. Although there are only a few studies addressing the biological significance of PROG synthesis in the brain, the autocrine/paracrine actions of locally synthesized PROG are likely to play an important role in the viability of neurons and in the formation of myelin sheaths. The neuroprotective effects of PROG have recently been documented in a murine model of spinal cord motoneuron degeneration, the Wobbler mouse. The treatment of symptomatic Wobbler mice with PROG for 15 days attenuated the neuropathological changes in spinal motoneurons and had beneficial effects on muscle strength and the survival rate of the animals. PROG may exert its neuroprotective effects by regulating expression of specific genes in neurons and glial cells, which may become hormone-sensitive after injury. The promyelinating effects of PROG were first documented in the mouse sciatic nerve and in co-cultures of sensory neurons and Schwann cells. PROG also promotes myelination in the brain, as shown in vitro in explant cultures of cerebellar slices and in vivo in the cerebellar peduncle of aged rats after toxin-induced demyelination. Local synthesis of PROG in the brain and the neuroprotective and promyelinating effects of this neurosteroid offer interesting therapeutic possibilities for the prevention and treatment of neurodegenerative diseases, for accelerating regenerative processes and for preserving cognitive functions during aging.