Hepatic encephalopathy (HE) is a serious neuropsychiatric complication of both acute and chronic liver disease. Symptoms of HE can include confusion, disorientation and poor coordination. A general consensus exists that the synergistic effects of excess ammonia and inflammation cause astrocyte swelling and cerebral edema; however, the precise molecular mechanisms that lead to these morphological changes in the brain are unclear. Cerebral edema occurs to some degree in all patients with HE, regardless of its grade, and could underlie the pathogenesis of this disorder. The different grades of HE can be diagnosed by a number of investigations, including neuropsychometric tests (such as the psychometric hepatic encephalopathy score), brain imaging and clinical scales (such as the West Haven criteria). HE is best managed by excluding other possible causes of encephalopathy alongside identifying and the precipitating cause, and confirming the diagnosis by a positive response to empiric treatment. Empiric therapy for HE is largely based on the principle of reducing the production and absorption of ammonia in the gut through administration of pharmacological agents such as rifaximin and lactulose, which are approved by the FDA for the treatment of HE.