The neural basis of the internal models used in sensorimotor transformations is beginning to be uncovered. Sensorimotor learning involves the modification of such models. Different stages of sensory-motor processing have been explored with a continuum of experimental tasks, from learning arbitrary associations of sensory cues to movements, to adapting to altered kinematic and dynamic environments. Several groups have been studying changes in neuronal activity in cortical and subcortical areas that may be related to the acquisition and consolidation processes. We discuss the progress and challenges in understanding how these learning-related neural changes are involved in the modification of internal models, and offer future directions.