Membrane receptors for neuromodulators (NM) are highly regulated in their distribution and efficacy-a phenomenon which influences the individual cell's response to central signals of NM release. Even though NM receptor regulation is implicated in the pharmacological action of many drugs, and is also known to be influenced by various environmental factors, its functional consequences and modes of action are not well understood. In this paper we summarize relevant experimental evidence on NM receptor regulation (specifically dopamine D1 and D2 receptors) in order to explore its significance for neural and synaptic plasticity. We identify the relevant components of NM receptor regulation (receptor phosphorylation, receptor trafficking and sensitization of second-messenger pathways) gained from studies on cultured cells. Key principles in the regulation and control of short-term plasticity (sensitization) are identified, and a model is presented which employs direct and indirect feedback regulation of receptor efficacy. We also discuss long-term plasticity which involves shifts in receptor sensitivity and loss of responsivity to NM signals. Finally, we discuss the implications of NM receptor regulation for models of brain plasticity and memorization. We emphasize that a realistic model of brain plasticity will have to go beyond Hebbian models of long-term potentiation and depression. Plasticity in the distribution and efficacy of NM receptors may provide another important source of functional plasticity with implications for learning and memory.