Cephalopods are unique among mollusks in exhibiting an elaborate central nervous system (CNS) and remarkable cognitive abilities. Despite a profound knowledge of the neuroanatomy and neurotransmitter distribution in their adult CNS, little is known about the expression of neurotransmitters during cephalopod development. Here, we identify the first serotonin-immunoreactive (5-HT-ir) neurons during ontogeny and describe the establishment of the 5-HT system in the pygmy squid, Idiosepius notoides. Neurons that are located dorsally to each optic lobe are the first to express 5-HT, albeit only when the lobular neuropils are already quite elaborated. Later, 5-HT is expressed in almost all lobes, with most 5-HT-ir cell somata appearing in the subesophageal mass. Further lobes with numerous 5-HT-ir cell somata are the subvertical and posterior basal lobes and the optic and superior buccal lobes. Hatching squids possess more 5-HT-ir neurons, although the proportions between the individual brain lobes remain the same. The majority of 5-HT-ir cell somata appears to be retained in the adult CNS. The overall distribution of 5-HT-ir elements within the CNS of adult I. notoides resembles that of adult Octopus vulgaris and Sepia officinalis. The superior frontal lobe of all three species possesses few or no 5-HT-ir cell somata, whereas the superior buccal lobe comprises many cell somata. The absence of 5-HT-ir cell somata in the inferior buccal lobes of cephalopods and the buccal ganglia of gastropods may constitute immunochemical evidence of their homology. This integrative work forms the basis for future studies comparing molluscan, lophotrochozoan, ecdysozoan, and vertebrate brains.