FTY720 (fingolimod, Novartis) is a promising investigational drug for relapsing forms of multiple sclerosis (MS), an autoimmune and neurodegenerative disorder of the central nervous system. It is currently under FDA review in the United States, and could represent the first approved oral treatment for MS. Extensive, ongoing clinical trials in Phase II/III have supported both the efficacy and safety of FTY720. FTY720 itself is not bioactive, but when phosphorylated (FTY720-P) by sphingosine kinase 2, it becomes active through modulation of 4 of the 5 known G protein-coupled sphingosine 1-phosphate (S1P) receptors. The mechanism of action (MOA) is thought to be immunological, where FTY720 alters lymphocyte trafficking via S1P1. However, MOA for FTY720 in MS may also involve a direct, neurological action within the central nervous system in view of documented S1P receptor-mediated signaling influences in the brain, and this review considers observations that support an emerging neurological MOA.