Abstract The bile steroids (BS) cholic acid and chenodeoxycholic acid are produced in hepatocytes and in the brain. Nothing is known about neuronal actions of BS. Deficiency in a 27-hydroxylase enzyme coincides with reduced production of chenodeoxycholic acid (CDCA) and a relative increase in cholic acid in an inherited lipid storage disease, cerebrotendinous xanthomatosis, characterized by neurological dysfunctions, which can be treated by dietary CDCA. We have examined the modulation of hypothalamic network activity by nine common BS. Cholate and CDCA significantly reduced the firing of hypothalamic neurons and synchronized network activity with CDCA being nearly 10 times more potent. The synthetic BS dehydrocholate synchronized the activity without affecting the firing rate. Gabazine, a GABAA receptor antagonist, occluded synchronization by BS. Whole-cell patch clamp recordings revealed a block of NMDA- and GABAA-receptors by BS. Potencies of nine common BS differed between NMDA and GABAA receptors, however in both cases they correlated with BS affinities for albumin but not with their lipophilicity, supporting a direct action at ligand gated ion channels. GABAergic synaptic currents displayed a faster decay under BS. Our data provide new insight into extrahepatic functions of BS revealing their neuroactive potential.