Hepatic encephalopathy (HE), a neuropsychiatric syndrome caused by acute or chronic liver failure or portosystemic shunting, is characterized by metabolic disturbances and varying degrees of cognitive dysfunction. HE is one of the most common complications and is the leading cause of mortality in cirrhotic patients. Although the exact pathogenesis of HE has not yet been fully elucidated, recent advances have improved our understanding of its pathophysiology, leading to evolving therapeutic strategies. This review summarizes the mechanisms underlying HE and the latest progress in its treatment, aiming to enhance the knowledge and improve diagnosis and therapy.