The hypothalamic neuropeptide oxytocin (OT) has attracted the attention both of the scientific community and a general audience because of its prosocial effects in mammals, and OT is now seen as a facilitator of mammalian species propagation. Furthermore, OT is a candidate for the treatment of social deficits in several neuropsychiatric and neurodevelopmental conditions. Despite such possibilities and a long history of studies on OT behavioral effects, the mechanisms of OT actions in the brain remain poorly understood. In the present review, based on anatomical, biochemical, electrophysiological, and behavioral studies, we propose a novel model of local OT actions in the central nervous system (CNS) via focused axonal release, which initiates intracellular signaling cascades in specific OT-sensitive neuronal populations and coordinated brain region-specific behaviors. In addition to its release from the posterior pituitary, the hypothalamic neuropeptide OT is found in several brain areas where it mediates several neurochemical and behavioral effects. Two mechanisms of release from hypothalamic OT neurons have been proposed to produce effective OT levels in the brain: (i) volume transmission – release from hypothalamic dendrites followed by diffusion in the extracellular space to other brain areas, and (ii) local axonal release. It is unclear which of these mechanisms produces effective OT concentrations at locations far from the hypothalamus. Based on OT concentrations in extracellular fluids and vesicles, taking into account diffusion gradients, receptor affinity, and coupling to signaling cascades, we estimate that only local axonal release produces effective OT concentrations even at remote locations. The regulation of axonal release may therefore be an underestimated factor in OT physiology and pathology.