Between 1987 and 1989, the different protein subunits that make up the receptor for the inhibitory neurotransmitter γ-aminobutyric acid (GABA) were identified. These make up the α, β, γ and δ families, for each of which exist several subtypes. This receptor is the molecular target of modern hypnotic drugs (i.e. benzodiazepines, zopiclone, Zolpidem and zaleplon). In the 10 years that have followed this milestone, significant progress has been made in exploring the molecular mechanisms of hypnotic drug action. Receptor subtype specificity of hypnotics has been explained in terms of differential affinity for receptors containing different α subunits, which are expressed in different brain regions. Zolpidem and zaleplon bind preferentially to α₁containing receptors, whereas benzodiazepines and zopiclone are aspecific. Different sets of subunits are encoded in contiguous ‘cassettes’ on the genome, and the transcription of each set appears to be regulated coherently. The predominant GABA_A receptor composition found in the brain is α₁β₂γ₂, which are all encoded on human chromosome 5. Targeted gene disruption has provided clues to the physiological functions served by GABA_A receptors containing different subunits. Receptors containing γ₂ appear to have a vital role in maintaining appropriate central inhibition, β₃-containing receptors may also be important determinants of excitability in certain brain regions, whereas a clear role for α₅-, α₆- and γ₃-containing receptors has not yet been established by these techniques. Site-directed mutagenesis has indicated that benzodiazepines bind to a cleft on the GABA_A receptor surface at the interface between the α and γ subunits. Other drugs (flumazenil, zopiclone, Zolpidem) also bind to the a subunit, but interact with amino acids in different binding domains to the benzodiazepines. The molecular mechanism of hypnotic dependence has been explored, and seems to involve downregulation of transcription of the normally prevalent α₁, β₂ and γ₂ subunits, and the reciprocal upregulation of the expression of rarer subunits. Chronic treatment with hypnotic drugs that may have less dependence potential, such as zopiclone and Zolpidem, appears to produce more limited change in GABA_A receptor subunit expression. These ideas will be important both for designing new hypnotic drugs with a better safety/efficacy profile, and for evaluating more appropriate ways of using the drugs available today.