Cytochrome P450 enzymes (CYPs) metabolize many drugs that act on the central nervous system (CNS), such as antidepressants and antipsychotics; drugs of abuse; endogenous neurochemicals, such as serotonin and dopamine; neurotoxins; and carcinogens. This takes place primarily in the liver, but metabolism can also occur in extrahepatic organs, including the brain. This is important for CNS-acting drugs, as variation in brain CYP-mediated metabolism may be a contributing factor when plasma levels do not predict drug response. This review summarizes the characterization of CYPs in the brain, using examples from the CYP2 subfamily, and discusses sources of variation in brain CYP levels and metabolism. Some recent experiments are described that demonstrate how changes in brain CYP metabolism can influence drug response, toxicity and drug-induced behaviours. Advancing knowledge of brain CYP-mediated metabolism may help us understand why patients respond differently to drugs used in psychiatry and predict risk for psychiatric disorders, including neurodegenerative diseases and substance abuse.