Neurosteroids are powerful modulators of brain function and behavior, yet their dynamics in the brain have remained elusive. Using in vivo microdialysis in male zebra finches, we found that local estradiol levels increased rapidly in the forebrain during social interactions with females. Furthermore, when males were exposed to other males' songs, local estradiol levels also increased and testosterone levels dropped in a cortical/pallial auditory region that is analogous to mammalian auditory cortex. We also found that local estradiol and testosterone levels were differentially regulated in this same region by the conventional neurotransmitters glutamate and GABA, respectively. This study provides direct evidence that forebrain steroid levels are acutely and differentially regulated during social behavior in a region-specific manner and in a rapid time course similar to that of traditional neuromodulators.