In a unique reversal of function, the ubiquitous and dominant inhibitory neurotransmitter, GABA, serves as the major source of neuronal excitation in the developing brain. Opening of voltage-gated Ca(2+) channels following GABA(A)-receptor-mediated depolarization translates the action of GABA into trophic responses, such as changes in cell death and synaptic patterning. During a perinatal sensitive period, steroid hormones, in particular estradiol, modulate these cellular responses to differentiate male and female brains. Profound sex differences are found in the volumes of specific nuclei, and the frequencies and types of synapses, in estradiol-concentrating brain regions. Recent evidence suggests that the mechanism of estradiol action involves enhancing, and extending the duration of, the developmental excitatory effects of GABA, resulting in divergence of the signal transduction pathways activated in males versus females. This is the first identification of a pivotal point in brain development that dictates the sex differences evident in adult physiology and behavior.