Historically, the locus coeruleus-norepinephrine (LC-NE) system has been implicated in arousal, but recent findings suggest that this system plays a more complex and specific role in the control of behavior than investigators previously thought. We review neurophysiological and modeling studies in monkey that support a new theory of LC-NE function. LC neurons exhibit two modes of activity, phasic and tonic. Phasic LC activation is driven by the outcome of task-related decision processes and is proposed to facilitate ensuing behaviors and to help optimize task performance (exploitation). When utility in the task wanes, LC neurons exhibit a tonic activity mode, associated with disengagement from the current task and a search for alternative behaviors (exploration). Monkey LC receives prominent, direct inputs from the anterior cingulate (ACC) and orbitofrontal cortices (OFC), both of which are thought to monitor task-related utility. We propose that these frontal areas produce the above patterns of LC activity to optimize utility on both short and long timescales.