Optical techniques are becoming increasingly important in healthcare, as both therapeutic and diagnostic tools. In neurosurgery, photonic technologies such as the microscope have already found widespread use. The overall aim of this paper is to give an overview of optical monitoring methods and their implementation and use in stereotactic and functional neurosurgery. The development steps presented in this paper range from radiofrequency-lesion size estimation using optics to a system adapted for neurosurgical intraoperative navigation during stereotactic deep brain stimulation (DBS) lead implantations. The two main optical methods implemented as intraoperative guidance tools are laser Doppler flowmetry and diffuse reflectance spectroscopy. By combining these fundamental methods with probe designs adapted to stereotactic systems, vessels can be tracked and "bar-codes" of tissue type along pre-defined trajectories used for DBS implantations identified. Examples of the optical methods used in relation to stereotactic DBS implantations are given.