The last several years have seen an increasing number of studies that describe effects of oxytocin and vasopressin on the behavior of animals or humans. Studies in humans have reported behavioral changes and, through fMRI, effects on brain function. These studies are paralleled by a large number of reports, mostly in rodents, that have also demonstrated neuromodulatory effects by oxytocin and vasopressin at the circuit level in specific brain regions. It is the scope of this review to give a summary of the most recent neuromodulatory findings in rodents with the aim of providing a potential neurophysiological basis for their behavioral effects. At the same time, these findings may point to promising areas for further translational research towards human applications.