Background: Tumour necrosis factor -alpha (TNF-α) is a pro-inflammatory cytokine that combines a plethora of activities in the early stages of an immune response. TNF-α has gained increasing importance given TNF-α upregulation in multiple brain pathologies like neuropsychiatric conditions such as depression, schizophrenia, as well as neuroinflammatory disorder like multiple sclerosis (MS). Aim: The aim of this review is to critically analyse neurobiological, immunological and molecular mechanisms through which TNF-α influences the development of cognitive dysfunction. Principal findings/results: The review presents several lines of original research showing that the immunological properties of TNF-α exacerbate inflammatory responses in the central nervous system such as microglial and endothelial activation, lymphocytic and monocytic infiltration and the expression of downstream pro-inflammatory cytokines and apoptotic factors. Depression, schizophrenia, and MS all manifest symptoms of activated immune response along with cognitive dysfunction, with TNF-α overexpression as a central clinical feature common to these disorders. Furthermore, TNF-α acts negatively on neuroplasticity and the molecular mechanisms of memory and learning (i.e., long-term potentiation and long-term depression). TNF-α also exerts influence over the production of neurotrophins (i.e., nerve growth factor and brain-derived neurotrophic factor), neurogenesis, and dendritic branching. Conclusions/significance: This review outlines that TNF-α and its receptors have a substantial yet underappreciated influence on the development and progression of neuropsychiatric symptoms across several disease entities. An improved understanding of these underlying mechanisms may help develop novel therapeutic targets in the form of drugs specifically targeting downstream products of TNF-α activation within the central nervous system.