Recent discoveries show that behaviourally relevant sensory experience drives the production of oestradiol - the classic sex steroid oestrogen - in auditory neurons in the adult brain of both males and females. This brain-generated oestrogen markedly enhances the efficiency of the neural coding of acoustic cues and shapes auditory-based behaviours on a timescale that is relevant for sensory processing and congruent with the action of rapid neuromodulators. These findings are re-shaping our current understanding of the mechanistic framework that supports sensory processing and the functional roles of hormones in the brain, and have implications for multiple health issues.