Long chain polyunsaturated fatty acids (PUFAs) are critical structural components of the brain and essential for normal brain development. The cellular transportation and physiological actions of PUFAs are mediated by fatty acid binding proteins (FABPs) which are encoded by the intracellular lipid-binding protein gene family. Three of the ten mammalian FABPs identified to date (FABP3, FABP5, FABP7) are expressed in the brain. These three FABPs, along with their fatty acid ligands, have distinct and dynamic spatio-temporal expression profiles that correlate with specific developmental stages and processes in the brain. Functional studies have revealed a variety of roles for FABPs in brain development including the generation of neuronal and/or glial cells, differentiation, neuronal cell migration and axis patterning. A number of transcription factors have been shown to be involved in the developmental regulation of FABP gene expression in the brain. Furthermore, FABPs appear to be major downstream effectors of signaling pathways such as Reelin-Dab1/Notch which mediate neuron-glia crosstalk during brain development. As PUFAs and FABPs play critical roles in brain development, considerable effort has been placed in elucidating their function in the pathogenesis and progression of brain cancers and neuropsychiatric disorders.