Hepatic encephalopathy (HE) has appeared in the last years as serious, life threatening and debilitating complication of both persistent and episodic liver diseases. This review explores HE definition, pathogenesis, diagnosis and available treatment options. Overt HE is a major cause for hospitalization, readmission and even death in cirrhotic patients, while covert HE can affect negatively on patient quality of life, ability of driving and survival. Clinical manifestations of HE include cognitive function impairment and deteriorated psychometric motor functions. Diagnostic options for HE are varied and depend on the impairment degree and the acuity of clinical presentations of HE. Pathogenesis of HE is sophisticated and depends on several factors, however, ammonia is considered to play a critical role in HE pathophysiology. Management options of HE include controlling of precipitating factors, medical treatment and liver transplantation. Standard medical treatment of HE comprises non-absorbable disaccharides as lactulose and some antibiotics as rifaximin. Newer drugs that act on serum ammonia level have a vital role in management of HE, such as l-ornithine-l-aspartate, sodium phenylbutyrate and sodium benzoate.