Neuropeptides that have classical hormonal functions via the pituitary have been implicated in cognitive function. Systemically and centrally administered arginine vasopressin (AVP) has been well documented to prolong extinction and improve consolidation in avoidance tasks. However, major questions have centered on the physiological mechanism of action for these effects and whether these cognitive enhancing actions reflect learning or performance. Work with vasopressin antagonists has led to the hypothesis that the effects of systemically administered AVP may be mediated peripherally and may be secondary to increases in blood pressure and activating effects. Centrally administered AVP, however, can also facilitate memory and recent work using an olfactory social memory task suggests that these effects may be mediated, at least in part, by AVP systems in the lateral septum. These results suggest that the cognitive enhancing actions of AVP may involve two parallel, but ultimately homologous, systems at the functional level. Pituitary-derived AVP may facilitate memory actions through more nonspecific (performance) effects, whereas centrally derived AVP may facilitate memory actions through more direct effects on the neural substrates of memory processing in the limbic system.