TGR5 (Gpbar‐1) is a membrane‐bound bile acid receptor in the gastrointestinal tract and immune cells with pleiotropic actions. As shown in the present study, TGR5 is also expressed in astrocytes and neurons. Here, TGR5 may act as a neurosteroid receptor, which is activated by nanomolar concentrations of 5β‐pregnan‐3α‐ol‐20‐one and micromolar concentrations of 5β‐pregnan‐3α‐17α‐21‐triol‐20‐one and 5α‐pregnan‐3α‐ol‐20‐one (allopregnanolone). TGR5 stimulation in astrocytes and neurons is coupled to adenylate cyclase activation, elevation of intracellular Ca²⁺ and the generation of reactive oxygen species. In cultured rat astrocytes, TGR5 mRNA is downregulated in the presence of neurosteroids and ammonia already at concentrations of 0.5 mmol L⁻¹. Furthermore, TGR5 protein levels are significantly reduced in isolated rat astrocytes after incubation with ammonia. A marked downregulation of TGR5 mRNA is also found in cerebral cortex from cirrhotic patients dying with hepatic encephalopathy (HE) when compared with brains from noncirrhotic control subjects. It is concluded that TGR5 is a novel neurosteroid receptor in brain with implications for the pathogenesis of HE. © 2010 Wiley‐Liss, Inc.