In addition to the well-known genomic effects of steroid molecules via intracellular steroid receptors, certain steroids rapidly alter neuronal excitability through binding sites on neurotransmitter-gated ion channels. Several of these steroids accumulate in the brain after local synthesis or after metabolization of adrenal steroids. The 3 alpha-hydroxy ring A-reduced pregnane steroids allopregnanolone and tetrahydrodeoxycorticosterone have been thought not to interact with intracellular receptors but enhance gamma-aminobutyric acid (GABA)-medicated chloride currents. When administered systematically in the rat, these neurosteroids display anxiolytic and hypnotic activities that suggest pronounced systemic effects as well as neuropsychopharmacological potential for modulation of sleep and anxiety. We demonstrated that these neurosteroids can regulate gene expression via the progesterone receptor. The induction of DNA-binding and transcriptional activation of the progesterone receptor requires intracellular oxidation of the neurosteroids into progesterone receptor-active 5 alpha-pregnane steroids. Thus, in physiological concentrations these neurosteroids regulate neuronal function through their concurrent influence on transmitter-gated ion channels and gene expression. These findings extend the concept of a "cross-talk" between membrane and nuclear hormone effects and provide a new role for the therapeutic application of these steroids in neurology and psychiatry.