Patients with hypopituitarism display impaired quality of life and excess morbidity and mortality, despite apparently optimal pituitary hormone replacement. Oxytocin is a neuropeptide synthesized in the anterior hypothalamus which plays an important role in controlling social and emotional behaviour, body weight and metabolism. Recent studies have suggested that a deficiency of oxytocin may be evident in patients with hypopituitarism and craniopharyngioma, and that this may be associated with deficits in cognitive empathy. Preliminary data hint at potential benefits of oxytocin therapy in improving these deficits and the accompanying metabolic disturbances that are common in these conditions. However, several challenges remain, including an incomplete understanding of the regulation and mechanisms of action of oxytocin, difficulties in accurately measuring oxytocin levels and in establishing a diagnosis of oxytocin deficiency, and a need to determine both the optimal mode of administration for oxytocin therapy and an acceptable safety profile with long‐term use. This review considers the data linking oxytocin to the neuropsychological and metabolic disturbances evident in patients with craniopharyngioma and hypopituitarism, and describes the challenges that need to be overcome before replacement therapy can be considered as a therapeutic option in clinical practice.