7α-Hydroxypregnenolone (7α-OH PREG) is a newly identified bioactive neurosteroid stimulating locomotor activity in the brain of newt, a wild animal, which serves as an excellent model to investigate the biosynthesis and biological action of neurosteroids. Here, we show that acute stress increases 7α-OH PREG synthesis in the dorsomedial hypothalamus (DMH) through corticosterone (CORT) action in newts. A 30-min restraint stress increased 7α-OH PREG synthesis in the brain tissue concomitant with the increase in plasma CORT concentrations. A 30-min restraint stress also increased the expression of cytochrome P450(7α) (CYP7B), the steroidogenic enzyme of 7α-OH PREG formation, in the DMH. Decreasing plasma CORT concentrations by hypophysectomy or trilostane administration decreased 7α-OH PREG synthesis in the diencephalon, whereas administration of CORT to these animals increased 7α-OH PREG synthesis. Glucocorticoid receptor was present in DMH neurons expressing CYP7B. Thus, CORT appears to act directly on DMH neurons to increase 7α-OH PREG synthesis. We further investigated the biological action of 7α-OH PREG in the brain under stress. A 30-min restraint stress or central administration of 7α-OH PREG increased serotonin concentrations in the diencephalon. Double immunolabeling further showed colocalization of CYP7B and serotonin in the DMH. These results indicate that acute stress increases the synthesis of 7α-OH PREG via CORT action in the DMH, and 7α-OH PREG activates serotonergic neurons in the DMH that may coordinate behavioral responses to stress. This is the first demonstration of neurosteroid biosynthesis regulated by peripheral steroid hormone and of neurosteroid action in the brain under stress in any vertebrate class.