All the classes of hormonal steroids physiologically produced in the body (androgens, estrogens, progestagens, and corticosteroids) are able to exert important effects on the brain, but the mechanisms of their actions are not always well understood. Steroids may interact with intracellular receptors to activate the genome, but some of their effects are probably extragenomic and involve interactions with cellular membranes. Moreover, not all the steroids act always in their native molecular form; a large group of them must actually be transformed into "active" metabolites. This may occur at the level of their respective target structures. For example, androgens are metabolized in the brain into estrogens and into 5 alpha-reduced androgens, like 5 alpha-androstan-17 beta-ol-3-one (dihydrotestosterone; DHT) and 5 alpha-androstan-3 alpha, 17 beta-diol (3 alpha-diol). Progesterone, and possibly corticosteroids, may also be transformed into their corresponding 5 alpha-reduced metabolites. Also the cellular target (neurons and/or glial cells) of the hormonal steroids in the brain is not always clear. This review analyzes in detail one of the two major enzymatic systems that transform steroids in the brain, namely the 5 alpha-reductase-3 alpha-(3 beta)-hydroxysteroid dehydrogenase pathway. An active 5 alpha-reductase-3 alpha-hydroxysteroid dehydrogenase system is widely distributed in practically all CNS structures in all phases of development. In the brain, this enzymatic system is not regulated by castration or sex steroid administration; furthermore, neural inputs seem to be ineffective at the hypothalamic level. A recent interesting finding is the presence of high concentrations of the 5 alpha-reductase in the white matter. This probably is due to the fact that the white matter is particularly rich in myelin membranes, with which the enzymatic activity appears to be associated. An active 5 alpha-reductase activity has also been shown to be present in peripheral myelinated nerves. The localization in myelin membranes may suggest a possible involvement of 5 alpha-reduced metabolites of the different steroids in the process of myelination. The presence of the 5 alpha-reductase was analyzed in neurons, astrocytes, and oligodendrocytes isolated from the brains of male rats, as well as in neurons and glial cells grown in culture. Neurons appear to be more active than glial cells in converting testosterone into DHT. Only neurons possess aromatase activity.(ABSTRACT TRUNCATED AT 400 WORDS)