The hormones and other physiological agents that mediate the effects of stress on the body have protective and adaptive effects in the short run and yet can accelerate pathophysiology when they are over-produced or mismanaged. Here we consider the protective and damaging effects of these mediators as they relate to the immune system and brain. 'Stress' is a principle focus, but this term is rather imprecise. Therefore, the article begins by noting two new terms, allostasis and allostatic load that are intended to supplement and clarify the meanings of 'stress' and 'homeostasis'. For the immune system, acute stress enhances immune function whereas chronic stress suppresses it. These effects can be beneficial for some types of immune responses and deleterious for others. A key mechanism involves the stress-hormone dependent translocation of immune cells in the blood to tissues and organs where an immune defense is needed. For the brain, acute stress enhances the memory of events that are potentially threatening to the organism. Chronic stress, on the other hand, causes adaptive plasticity in the brain, in which local neurotransmitters as well as systemic hormones interact to produce structural as well as functional changes, involving the suppression of ongoing neurogenesis in the dentate gyrus and remodelling of dendrites in the Ammon's horn. Under extreme conditions only does permanent damage ensue. Adrenal steroids tell only part of the story as far as how the brain adapts, or shows damage, and local tissue modulators - cytokines for the immune response and excitatory amino acid neurotransmitters for the hippocampus. Moreover, comparison of the effects of experimenter-applied stressors and psychosocial stressors show that what animals do to each other is often more potent than what experimenters do to them. And yet, even then, the brain is resilient and capable of adaptive plasticity. Stress-induced structural changes in brain regions such as the hippocampus have clinical ramifications for disorders such as depression, post-traumatic stress disorder and individual differences in the aging process.