The study of the genetics of complex behaviors has evolved dramatically from the days of the nature versus nurture debates that dominated much of the past century. Here we discuss advances in our understanding of the genetics of affective and anxiety disorders. In particular, we highlight our growing understanding of specific gene-environment interactions that occur during critical periods in development, setting the stage for later behavioral phenotypes. We review the recent literature in the field, focusing on recent advances in our understanding of the role of the serotonin system in establishing normal anxiety levels during development. We emphasize the importance of understanding the effect of genetic variation at the level of functional circuits and provide examples from the literature of how such an approach has been exploited to study novel genetic endpoints, including genetically based variation in response to medication, a potentially valuable phenotype that has not received much attention to date.