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Transcranial magnetic stimulation (TMS) can be applied in different paradigms to obtain a measure of various aspects of cortical excitability. These different TMS paradigms provide information about different neurotransmitter systems, enhance our understanding about the pathophysiology of neuropsychiatric conditions, and in the future may be helpful as a guide for pharmacological interventions. In addition, repetitive TMS (rTMS) modulates cortical excitability beyond the duration of the rTMS trains themselves. Depending on rTMS parameters, a lasting inhibition or facilitation of cortical excitability can be induced. These effects can be demonstrated neurophysiologically or by combining rTMS with neuroimaging techniques. The effects do not remain limited to the cortical area directly targeted by rTMS, but affect a wider neural network transynaptically. Modulation of cortical excitability by rTMS may in the future be useful not only as a research tool but also as a therapeutic intervention in neurology, psychiatry, and neurorehabilitation.