The serotonergic system is an early forming component of the CNS circuitry, beginning its development on gestational days 11-12 in the rat. Owing to its early presence in the embryonic nervous system, 5-HT has been proposed to act as a developmental signal for receptive cells. In vivo and in vitro evidence that 5-HT can influence both biochemical and morphological differentiation of raphe neurons and receptive target cells suggests that this neurotransmitter may have an organizing function in the developing nervous system which involves effects on neurite outgrowth and other aspects of neuronal differentiation, including synaptogenesis. Such functions may be mediated by a variety of 5-HT receptors located on both neuronal and non-neuronal cells. The apparent function of 5-HT as a differentiation signal in the developing nervous system raises important issues regarding the use of psychoactive serotonergic drugs by pregnant women, since these drugs may act as neural teratogens in the unborn child.