In many psychiatric, neurodegenerative and systemic inflammatory disorders circadian melatonin is decreased whilst melatonin enzymes and melatonin receptors are genetic susceptibility factors. Treatment with melatonin is useful in a diverse range of medical conditions, including bipolar disorder, Alzheimer's disease, depression and fibromyalgia. Decreased melatonin effects are classically attributed to lost pineal production. However, melatonin, along with its immediate precursor N-acetylserotonin (NAS), is produced by many, if not all, mitochondrial containing cells, including immune cells and central glia. Here we review the data on local melatonin and NAS production and propose that astrocyte melatonin and NAS efflux is crucial to local central inflammation regulation at the glia-neuronal interface. Melatonin and NAS provide antioxidant and anti-inflammatory effects, as well as increasing mitochondrial oxidative phosphorylation and functioning. Consequently, their decreased production at sites of local inflammation is proposed to underlie melatonin's genetic association with a diverse range of medical conditions. Similarly the benefits of serotonin boosting medications, including antidepressants, across a wide range of conditions are partly mediated by increasing serotonin availability for astrocytic local NAS and melatonin production. Such a conceptualization incorporates a plethora of data across different disorders, especially the commonalities in oxidative and nitrosative stress, anti-oxidants, tryptophan catabolites and mitochondrial dysregulation evident in a diverse array of medical conditions. Glia melatonin and NAS regulation are important treatment targets in psychiatric disorders, neurodegenerative disorders and glioma.