How do hormones exert their effect?

At the level of the cell hormones act by binding to receptors (molecules that recognise the hormone's shape). Receptors can be either on the cell surface or intracellular. Binding of hormones to cell surface receptors activates second messenger systems; intracellular processes normally involving the phosphorylation (addition of a phosphate group) or dephosphorylation (removal of a phosphate group) of proteins. Eventually this leads to changes such as altered enzyme activity, gene activation or membrane permeability changes that alter the activity of that cell. Binding of hormones to intracellular receptors forms a complex that directly interacts with DNA to alter cell function.

The process by which the chemical message is turned into altered cell activity is known as signal transduction.