Hepatic encephalopathy (HE) is a common and potentially devastating neuropsychiatric complication of acute liver failure and cirrhosis. Even in its mildest form, minimal HE (MHE), the syndrome significantly impacts daily living and heralds progression to overt HE. There is maturity in the scientific understanding of the cellular processes that lead to functional and structural abnormalities in astrocytes. Hyperammonemia and subsequent cell swelling is a key pathophysiological abnormality, but this aspect alone is insufficient to fully explain the complex neurotransmitter abnormalities that may be observable using sophisticated imaging techniques. Inflammatory cytokines, reactive oxygen species activation and the role of neurosteroids on neurotransmitter binding sites are emerging pathological lines of inquiry that have yielded important new information on the processes underlying HE and offer promise of future therapeutic targets. Overt HE remains a clinical diagnosis and the neurophysiological and imaging modalities used in research studies have not transferred successfully to the clinical situation. MHE is best characterized by psychometric evaluation, but these tests can be lengthy to perform and require specific expertise to interpret. Simpler computer-based tests are now available and perhaps offer an opportunity to screen, diagnose and monitor MHE in a clinical scenario, although large-scale studies comparing the different techniques have not been undertaken. There is a discrepancy between the depth of understanding of the pathophysiology of HE and the translation of this understanding to a simple, easily understood diagnostic and longitudinal marker of disease. This is a present area of focus for the management of HE.