A large number of neuropeptides has been identified in the brain of insects. At least 35 neuropeptide precursor genes have been characterized in Drosophila melanogaster, some of which encode multiple peptides. Additional neuropeptides have been found in other insect species. With a few notable exceptions, most of the neuropeptides have been demonstrated in brain interneurons of various types. The products of each neuropeptide precursor seem to be co-expressed, and each precursor displays a unique neuronal distribution pattern. Commonly, each type of neuropeptide is localized to a relatively small number of neurons. We describe the distribution of neuropeptides in brain interneurons of a few well-studied insect species. Emphasis has been placed upon interneurons innervating specific brain areas, such as the optic lobes, accessory medulla, antennal lobes, central body, and mushroom bodies. The functional roles of some neuropeptides and their receptors have been investigated in D. melanogaster by molecular genetics techniques. In addition, behavioral and electrophysiological assays have addressed neuropeptide functions in the cockroach Leucophaea maderae. Thus, the involvement of brain neuropeptides in circadian clock function, olfactory processing, various aspects of feeding behavior, and learning and memory are highlighted in this review. Studies so far indicate that neuropeptides can play a multitude of functional roles in the brain and that even single neuropeptides are likely to be multifunctional.