Following stimulation of NMDA receptors, neurons transiently synthesize nitric oxide (NO) in a calcium/calmodulin-dependent manner through the activation of neuronal NO synthase. Nitric oxide acts as a messenger, activating soluble guanylyl cyclase and participating in the transduction signalling pathways involving cyclic GMP. Nitric oxide also binds to cytochrome c oxidase, and is able to inhibit cell respiration in a process that is reversible and in competition with oxygen. This action can also lead to the release of superoxide anion from the mitochondrial respiratory chain. Here, we discuss recent evidence that this mitochondrial interaction represents a molecular switch for cell signalling pathways involved in the control of physiological functions. These include superoxide- or oxygen-dependent modulation of gene transcription, calcium-dependent cell signalling responses, changes in the mitochondrial membrane potential or AMP-activated protein kinase-dependent control of glycolysis. In pathophysiological conditions, such as brain ischaemia or neurological disorders, NO is formed excessively by NMDA receptor over-activation in neurons, or by inducible NO synthase from neighbouring glia (microglial cells and astrocytes). Elevated NO concentrations can then interact with superoxide anion, generated by the mitochondria or by other mechanisms, leading to the formation of the powerful oxidant species peroxynitrite. During pathological conditions activation of the NAD+-consuming enzyme poly(APD-ribose) polymerase-1 (PARP-1) is also a likely mechanism for NO-mediated energy failure and neurotoxicity. Activation of PARP-1 is, however, a repair process, which in milder forms of oxidative stress protects neurons from death. Thus, whilst NO plays a physiological role in neuronal cell signalling, its over-production may cause neuronal energy compromise leading to neurodegeneration.