Within the nervous system, estradiol was originally characterized through its critical role in sexual maturation and reproduction. However, it is now firmly established that estradiol affects a diverse array of brain functions including learning and memory, fine motor control, pain perception and mood. In parallel with this increased scope, new mechanisms of estradiol action are being elucidated. Traditionally, estradiol was known to work through intracellular estrogen receptors (ERα and ERβ), which regulate transcription by binding to estrogen response elements (EREs). These functions, critical for sexual behavior, are termed "genomic" and are distinct from "nongenomic" effects whereby estradiol produces rapid changes in neuronal function by processes initiated at the membrane surface. Recent advances have demonstrated that these nongenomic effects are also mediated by classical estrogen receptors that are localized to the plasma membrane. Further, stimulation of estrogen receptors on the membrane surface by estradiol activates G-protein-coupled receptor (GPCR) signaling, which can lead to both short- and long-term changes in neuronal excitability. Related, the brain itself synthesizes estrogens, allowing for localized signaling by the steroid that is less dependent on gonadal secretion. This review outlines highlights from both established and recent findings of estrogen action, how these diverse mechanisms act in concert to regulate nervous system function, and outlines several questions that still remain regarding the effects of estrogen in brain.