Nitric oxide (NO) functions widely as a transmitter/diffusible second messenger in the central nervous system, exerting physiological effects in target cells by binding to specialized guanylyl cyclase-coupled receptors, resulting in cGMP generation. Despite having many context-dependent physiological roles and being implicated in numerous disease states, there has been a lack of clarity about the ways that NO operates at the cellular and subcellular levels. Recently, several approaches have been used to try to gain a more concrete, quantitative understanding of this unique signalling pathway. These approaches have included analysing the kinetics of NO receptor function, real-time imaging of cellular NO signal transduction in target cells, and the use of ultrasensitive detector cells to record NO as it is being generated from native sources in brain tissue. The current picture is that, when formed in a synapse, NO is likely to act only very locally, probably mostly within the confines of that synapse, and to exist only in picomolar concentrations. Nevertheless, closely neighbouring synapses may also be within reach, raising the possibility of synaptic crosstalk. By engaging its enzyme-coupled receptors, the low NO concentrations are able to stimulate physiological (submicromolar) increases in cGMP concentration in an activity-dependent manner. When many NO-emitting neurones or synapses are active simultaneously in a tissue region, NO can act more like a volume transmitter to influence, and perhaps coordinate, the behaviour of cells within that region, irrespective of their identity and anatomical connectivity.