RNA localization is emerging as an important process to restrict certain proteins to specific subcellular domains and thus spatially control the expression of genes within cells. It is used, for instance, to compartmentalize the developing embryo during early embryogenesis. The localization of RNA also plays important roles later during development, such as in asymmetric cell divisions, cell migration and the outgrowth and pathfinding of axons and dendrites. In differentiated cells, it serves to subdivide the cell into functionally distinct compartments. For example, in mature neurons it is believed to contribute to the plastic changes of individual synapses underlying learning and memory. In this review, we highlight the importance of subcellular RNA localization for the function of the nervous system and neurological diseases associated with defective RNA localization and translation. These diseases include fragile X mental retardation syndrome, spinocerebellar ataxia and spinal muscular atrophy.