In the central nervous system (CNS), the cytokine tumor necrosis factor-alpha (TNF alpha) is produced by both neurons and glial cells, participates in developmental modeling, and is involved in many pathophysiological conditions. There are activity-dependent expressions of TNF alpha as well as low levels of secretion in the resting state. In contrast to the conventional view of a cytotoxic effect of TNF alpha, accumulating evidence suggests a beneficial effect when TNF alpha is applied at optimal doses and at specific periods of time. The bimodal effect is related to subtypes of receptors, activation of different signal transduction pathways, and the presence of other molecules that alter the intracellular response elements such as immediate-early genes. TNF alpha may be an important neuromodulator in development of the CNS, diseases of demyelination and degeneration, and in the process of regeneration. It could induce growth-promoting cytokines and neurotrophins, or it could increase the production of antiproliferative cytokines, nitric oxide, and free radicals, thereby contributing to apoptosis.