Hepatic encephalopathy (HE) is a neuropsychiatric syndrome associated with both acute and chronic liver dysfunction, spanning a spectrum that ranges from mild neuropsychological disturbances to coma. The central role of ammonia in the pathogenesis of HE remains incontrovertible however, there is a robust evidence base indicating the important role of inflammation in exacerbating the neurological effects of HE. Inflammation can arise directly within the brain itself as a result of deranged nitrogen and energy homeostasis, with resultant neuronal, astrocyte and microglial dysfunction. Inflammation may also originate in the peripheral circulation and exert effects on the brain indirectly, via the release of pro-inflammatory mediators which directly signal to the brain via the vagus nerve. This review summarises the data that demonstrate the synergistic relationship of inflammation and ammonia that culminates in the manifestation of HE. Sterile inflammation arising from the inflamed or necrotic liver, circulating endotoxin arising from the gut (bacterial translocation) inducing immune dysfunction, and superimposed sepsis will be comprehensively discussed. Finally, this review will provide an overview of the existing and novel treatments on the horizon which can target the inflammatory response, and how they might translate into clinical practise as therapies in the prophylaxis and treatment of HE.