In nerve cells,the short-lived signalling molecule nitric oxide (NO) is generated by Ca2+-calmodulin-stimulated NO synthases. Nitric oxide activates soluble guanylate cyclase in target cells, leading to the formation of cGMP. Biochemical investigations have shown the presence of a Ca2+-calmodulin-regulated NO-cGMP signalling mechanism in the nervous system of insects. Using NADPH-diaphorase staining as a marker for the enzyme NO synthase and an antiserum against cGMP,the cellular organization of NO donor and target cells has so far been resolved in the locust and fruit fly. This paper provides an overview of the cellular organization of NO signalling in the insect nervous system as well as highlighting its functions in olfactory information processing, formation of olfactory memory, vision, and neuronal development. The resolution of discrete donor and NO-responsive target cells in the developing nervous system of Drosophila will facilitate the genetic and pharmacological analysis of NO-cGMP signal transduction.