Neuropeptides in insects act as neuromodulators in the central and peripheral nervous system and as regulatory hormones released into the circulation. The functional roles of insect neuropeptides encompass regulation of homeostasis, organization of behaviors, initiation and coordination of developmental processes and modulation of neuronal and muscular activity. With the completion of the sequencing of the Drosophila genome we have obtained a fairly good estimate of the total number of genes encoding neuropeptide precursors and thus the total number of neuropeptides in an insect. At present there are 23 identified genes that encode predicted neuropeptides and an additional seven encoding insulin-like peptides in Drosophila. Since the number of G-protein-coupled neuropeptide receptors in Drosophila is estimated to be around 40, the total number of neuropeptide genes in this insect will probably not exceed three dozen. The neuropeptides can be grouped into families, and it is suggested here that related peptides encoded on a Drosophila gene constitute a family and that peptides from related genes (orthologs) in other species belong to the same family. Some peptides are encoded as multiple related isoforms on a precursor and it is possible that many of these isoforms are functionally redundant. The distribution and possible functions of members of the 23 neuropeptide families and the insulin-like peptides are discussed. It is clear that each of the distinct neuropeptides are present in specific small sets of neurons and/or neurosecretory cells and in some cases in cells of the intestine or certain peripheral sites. The distribution patterns vary extensively between types of neuropeptides. Another feature emerging for many insect neuropeptides is that they appear to be multifunctional. One and the same peptide may act both in the CNS and as a circulating hormone and play different functional roles at different central and peripheral targets. A neuropeptide can, for instance, act as a coreleased signal that modulates the action of a classical transmitter and the peptide action depends on the cotransmitter and the specific circuit where it is released. Some peptides, however, may work as molecular switches and trigger specific global responses at a given time. Drosophila, in spite of its small size, is now emerging as a very favorable organism for the studies of neuropeptide function due to the arsenal of molecular genetics methods available.