During the past several years, there has been increasing interest in the effects of estrogen on neural function. This enthusiasm is driven, in part, by the results of early clinical studies suggesting that estrogen therapy given after menopause may prevent, or at least delay, the onset of Alzheimer's disease in older women. However, later clinical trials of women with probable Alzheimer's disease had contrary results. Much of the current research related to estrogen and brain function is focused in two directions. One involves clinical studies that examine the potential of estrogen in protecting against cognitive decline during normal aging and against Alzheimer's disease (neuroprotection). The other direction, which is the primary focus of this review, involves laboratory studies that examine the mechanisms by which estrogen can modify the structure of nerve cells and alter the way neurons communicate with other cells in the brain (neuroplasticity). In this review, we examine recent evidence from experimental and clinical research on the rapid effects of estrogen on several mechanisms that involve synaptic plasticity in the nervous system, including hippocampal excitability, long-term potentiation and depression related to sex and aging differences, cellular neuroprotection and probable molecular mechanisms of the action of estrogen in brain tissue.