Hormonal and locally produced steroids act in the nervous system as neuroendocrine regulators, as trophic factors and as neuromodulators and have a major impact on neural development and function. Glial cells play a prominent role in the local production of steroids and in the mediation of steroid effects on neurons and other glial cells. In this review, we examine the role of glia in the synthesis and metabolism of steroids and the functional implications of glial steroidogenesis. We analyze the mechanisms of steroid signaling on glia, including the role of nuclear receptors and the mechanisms of membrane and cytoplasmic signaling mediated by changes in intracellular calcium levels and activation of signaling kinases. Effects of steroids on functional parameters of glia, such as proliferation, myelin formation, metabolism, cytoskeletal reorganization, and gliosis are also reviewed, as well as the implications of steroid actions on glia for the regulation of synaptic function and connectivity, the regulation of neuroendocrine events, and the response of neural tissue to injury. © 2006 Wiley‐Liss, Inc.