Clinical reports show that oxytocin (OT) is related to stress-related disorders such as depression, anxiety disorder, and post-traumatic stress disorder. Two key structures in the brain should be paid special attention with regard to stress regulation, namely, the hypothalamus and the hippocampus. The former is the region for central command for most, if not all, of the major endocrine systems, and the latter takes a key position in the regulation of mood and anxiety. There are extensive neural projections between the two structures, and both are functionally intertwined. The hypothalamus projects OTergic neurons to the hippocampus, and the latter possesses high levels of OT receptors. The hippocampus also regulates the secretion of glucocorticoids, a major group of stress hormones. Excessive levels of glucocorticoids in chronic stress cause atrophy of the hippocampus, whereas OT has been shown to protect hippocampal neurons from the toxic effects of glucocorticoids. In this article, we discuss how neural and endocrine mechanisms interplay in stress regulation, with an emphasis on the role of OT, as well as its therapeutic potential in the treatment of stress-related disorders.