Aromatase cytochrome P45 (P450AROM) enzyme activity catalyzes the conversion of androgens to estrogens in specific brains areas. During central nervous system development local estrogen formation influences the sexual differentiation of neural structures (i.e., by increasing neurite growth and establishing neural circuitry) and modulates neuroendocrine/reproductive functions and sexual behavior. More than 20 years ago, in 1970, Naftolin et al. provided preliminary direct evidence for the aromatization of androgens by central neuroendocrine tissues. This work created the foundation for the brain aromatase hypothesis. A review of past and recent data reveals the importance of brain aromatase in the development and function of the central nervous system. This review re-examines the aromatase hypothesis in light of recent data and a theoretical proposal is presented in reference to the aromatase mechanism. The metabolic pathway of androgen metabolism by the aromatase cytochrome P450 pathway, cell type, distribution, developmental profile, and regulation of brain aromatase is also presented. The complex nature of brain aromatase is exemplified by recent molecular biology studies examining the expression of aromatase cytochrome P450 during prenatal/postnatal development. Data derived from these studies provide insight into the regulation of the brain aromatase cytochrome P450 gene and suggest an additional level of control for the expression of brain aromatase. These findings present evidence for the utilization of alternative promoter(s) in man and rodents in driving aromatase gene expression in brain. It is clear that molecular mechanism(s) account for the diverse expression of aromatase in different neural tissue sites and during various physiological states or developmental periods. Therefore, further study is necessary in order to understand the significance of the regulation of local estrogen biosynthesis by the aromatase cytochrome P450 gene during prenatal and postnatal development due to the dramatic impact these estrogen molecules have on neural development and their influence on reproductive function and behavior.