The hormone melatonin is secreted primarily from the pineal gland, with highest levels occurring during the dark period of a circadian cycle. This hormone, through an action in the brain, appears to be involved in the regulation of various neural and endocrine processes that are cued by the daily change in photoperiod. This article reviews the pharmacological characteristics and function of melatonin receptors in the central nervous system, and the role of melatonin in mediating physiological functions in mammals. Melatonin and melatonin agonists, at picomolar concentrations, inhibit the release of dopamine from retina through activation of a site that is pharmacologically different from a serotonin receptor. These inhibitory effects are antagonized by the novel melatonin receptor antagonist luzindole (N-0774), which suggests that melatonin activates a presynaptic melatonin receptor. In chicken and rabbit retina, the pharmacological characteristics of the presynaptic melatonin receptor and the site labeled by 2-[125I]iodomelatonin are identical. It is proposed that 2-[125I]iodomelatonin binding sites (e.g., chicken brain) that possess the pharmacological characteristics of the retinal melatonin receptor site (order of affinities: 2-iodomelatonin greater than 6-chloromelatonin greater than or equal to melatonin greater than or equal to 6,7-di-chloro-2-methylmelatonin greater than 6-hydroxymelatonin greater than or equal to 6-methoxymelatonin greater than N-acetyltryptamine greater than or equal to luzindole greater than N-acetyl-5-hydroxytryptamine greater than 5-methoxytryptamine much greater than 5-hydroxytryptamine) be classified as ML-1 (melatonin 1). The 2-[125I]iodomelatonin binding site of hamster brain membranes possesses different binding and pharmacological characteristics from the retinal melatonin receptor site and should be classified as ML-2. In summary, the recent advances in the pharmacological characterization of melatonin receptors in the central nervous system will further stimulate the search for potent and selective melatonin receptor agonists and antagonists, and should aid in our understanding of the mechanism of action of melatonin in mammalian brain.