The dentate gyrus of the hippocampal formation develops during an extended period that begins during gestation and continues well into the postnatal period. Furthermore, the dentate gyrus undergoes continual structural remodeling in adulthood. The production of new granule neurons in adulthood has been documented in a number of mammalian species, ranging from rodents to primates. The late development of this brain region makes the dentate gyrus particularly sensitive to environmental and experience-dependent structural changes. Studies have demonstrated that the proliferation of granule cell precursors, and ultimately the production of new granule cells, are dependent on the levels of circulating adrenal steroids. Adrenal steroids inhibit cell proliferation in the dentate gyrus during the early postnatal period and in adulthood. The suppressive action of glucocorticoids on cell proliferation is not direct but occurs through an NMDA receptor-dependent excitatory pathway. Stressful experiences, which are known to elevate circulating levels of glucocorticoids and stimulate hippocampal glutamate release, inhibit the proliferation of granule cell precursors. Chronic stress results in persistent inhibition of granule cell production and changes in the structure of the dentate gyrus, raising the possibility that stress alters hippocampal function through this mechanism. This review considers the unusual developmental profile of the dentate gyrus and its vulnerability to environmental perturbations. The long-term impact of developmental events on hippocampal function is considered.