Somatostatin is a tetradecapeptide that is assuming increasing importance as a regulator of central nervous system activity. Originally identified as the hypothalamic growth hormone release-inhibiting factor, somatostatin has subsequently been shown to be extensively and selectively distributed throughout the central nervous system, to alter neuron excitability, to regulate and be regulated by the activity of classical neurotransmitters and neuropeptides, to exert a number of direct behavioral actions, and to display neuropsychiatric disorder-related alterations. In this article, a three-part study of cerebral spinal fluid (CSF) somatostatin in affective illness and schizophrenia is presented. In part 1, significant reductions in CSF somatostatin were observed in 49 bipolar and unipolar depressed patients relative to 47 controls. Values during depression were also significantly lower than those observed in affective disorder during the improved state or in schizophrenia. Diurnal studies involving paired AM and PM lumbar punctures revealed that depressed patients and normal volunteers had similar somatostatin values in the evening, despite having significantly different values in the morning. In part 2, the effects of several psychopharmacological agents on CSF somatostatin were examined, particularly the tricyclic anticonvulsant carbamazepine. A significant reduction of CSF somatostatin during treatment with carbamazepine was observed. The effect of carbamazepine on somatostatin could be related to its anticonvulsant, analgesic, or psychotropic effects. Part 3 deals with somatostatin as a major regulator of hypothalamic-pituitary-adrenal (HPA) axis activity. Somatostatin affects HPA activity by inhibiting, at a number of cellular levels, the stimulated release of adrenocorticotrophic hormone (ACTH) from the pituitary. A significant negative relationship between CSF somatostatin and the postdexamethasone plasma cortisol level in 22 depressed and 16 schizophrenic patients was observed. This relationship between low CSF somatostatin and escape from dexamethasone suppression was observed irrespective of diagnosis (i.e., depression or schizophrenia). Thus, there is indirect supporting evidence for a role for somatostatin dysregulation in the most consistently observed biological abnormality in depression, escape from dexamethasone suppression. Further study of somatostatin in neuropsychiatric disorders, and particularly depressive illness, offers great promise for better understanding their underlying affective, vegetative, cognitive, and physiological dysregulations.