Testosterone is a steroid sex hormone with an important role in the physiology in both sexes. It is involved in the development of morphological and functional parameters of the body via multiple molecular mechanisms. Intensive research focused on testosterone reveals associations with cognitive abilities and behavior and its causative role in sex differences in cognition. Testosterone modulates brain structure and the differentiation of neurons during intrauterine development with profound effects on brain functions during postnatal life. In this review we summarize the effects of testosterone on brain physiology and cognition with respect to the underlying molecular mechanisms.