Nitric oxide (NO) is a unique type of signalling molecule that operates throughout the central nervous system, where it participates in numerous behaviours, including in learning and memory formation. At a more cellular level, NO contributes to long- and short-term modifications of synaptic strength in many brain areas. NO is unusual in being highly membrane permeable and it conveys messages not just between neurones but also between neurones and glial cells and, more surprisingly, also between capillary endothelial cells and neurones (Garthwaite, 2008). There remains, however, a lack of clarity about how NO functions at the cellular and molecular levels, particularly when compared with conventional neurotransmitters. We have attempted to address this issue in three ways. First, knowledge of the kinetics of receptors for signalling molecules reveals much about the messages they have evolved to detect and decode. In the case of NO, the receptors couple the binding of NO to the synthesis of cGMP by an intrinsic guanylyl cyclase domain of the protein. By analysing the kinetics of this enzyme-linked receptor it has been possible to elaborate a model that simulates all the main functional data from experiments on neural and other cells in vitro, as well as on the purified receptor protein (Roy et al., 2008). From this work, it is concluded that the receptors are highly sensitive NO detectors capable of capturing brief (sub-second), low level (sub-nanomolar) NO signals and transducing them into meaningful biological responses. Secondly, in the absence of direct methods of measurement, computer modelling has been used to predict the profiles of NO in time and space when synthesised at active synapses or in capillaries. This approach suggests that the relevant NO concentrations are orders of magnitude lower than was once thought, probably in the sub-nanomolar range. Moreover, in contrast to early estimates, NO released at synapses may act only very locally, even in a synapse-specific manner. A more global low-level NO signal is likely arise from the network of capillary endothelial cells. Finally, using a newly developed real-time cGMP imaging technique (Nausch et al., 2008) it has been possible to analyse quantitatively cellular responses to sub-nanomolar NO concentrations for the first time, the results of which provide good support for the conclusions about the dynamics of NO signal transduction drawn from computer modelling and the analysis of the receptor kinetics.