This review describes therapeutically relevant mechanisms of action of botulinum toxin (BT). BT's molecular mode of action includes extracellular binding to glycoproteine structures on cholinergic nerve terminals and intracellular blockade of the acetylcholine secretion. BT affects the spinal stretch reflex by blockade of intrafusal muscle fibres with consecutive reduction of Ia/II afferent signals and muscle tone without affecting muscle strength (reflex inhibition). This mechanism allows for antidystonic effects not only caused by target muscle paresis. BT also blocks efferent autonomic fibres to smooth muscles and to exocrine glands. Direct central nervous system effects are not observed, since BT does not cross the blood-brain-barrier and since it is inactivated during its retrograde axonal transport. Indirect central nervous system effects include reflex inhibition, normalisation of reciprocal inhibition, intracortical inhibition and somatosensory evoked potentials. Reduction of formalin-induced pain suggests direct analgesic BT effects possibly mediated through blockade of substance P, glutamate and calcitonin gene related peptide.