Cells reside in a dynamic microenvironment that presents them with regulatory signals that vary in time, space, and amplitude. The cell, in turn, interprets these signals and accordingly initiates downstream processes including cell proliferation, differentiation, migration, and self-organization. Conventional approaches to perturb and investigate signaling pathways (e.g., agonist/antagonist addition, overexpression, silencing, knockouts) are often binary perturbations that do not offer precise control over signaling levels, and/or provide limited spatial or temporal control. In contrast, optogenetics leverages light-sensitive proteins to control cellular signaling dynamics and target gene expression and, by virtue of precise hardware control over illumination, offers the capacity to interrogate how spatiotemporally varying signals modulate gene regulatory networks and cellular behaviors. Recent studies have employed various optogenetic systems in stem cell, embryonic, and somatic cell patterning studies, which have addressed fundamental questions of how cell-cell communication, subcellular protein localization, and signal integration affect cell fate. Other efforts have explored how alteration of signaling dynamics may contribute to neurological diseases and have in the process created physiologically relevant models that could inform new therapeutic strategies. In this review, we focus on emerging applications within the expanding field of optogenetics to study gene regulation, cell signaling, neurodevelopment, and neurological disorders, and we comment on current limitations and future directions for the growth of the field.