Although it is widely known that steroid hormones differentiate the brain, little is known about the signal transduction pathways that are influenced by steroid hormones during development. This review focuses on divergence in the phosphorylation of cAMP response element binding protein (CREB) in the developing male and female rat brain. At birth, males have an increased phosphorylation of CREB compared to females. As CREB mediates changes in cellular morphology, function and survival rates, its activation may underlie an important event in steroid-mediated sexual differentiation of the brain. The importance of CREB is further supported by a sex difference in the expression of the nuclear receptor coactivator, CREB-binding protein, a critical factor involved in the genomic actions of CREB. This suggests that the developing male brain may be in a hyper-responsive state to factors that lead to increased phosphorylation of CREB, resulting in divergent responses in males versus females. An example of this divergence is the response to GABA. In the male rat brain, GABA action leads to increased phosphorylation of CREB; whereas GABA action in the female brain leads to decreased phosphorylation of CREB. The potential consequences of this divergence in the regulation of CREB are discussed in relation to adult sexually dimorphic brain morphology, physiology and behaviour.