Anti-N-methyl-d-aspartate receptor (anti-NMDAR) encephalitis is a treatable autoimmune disease of the central nervous system (CNS) with prominent neurologic and psychiatric features at disease onset. The disease is associated with the production of autoantibodies to NMDAR, a protein involved in memory function and synaptic plasticity. Affected patients develop a multistage progressive illness with symptoms ranging from memory deficits, seizures and psychosis, to potentially lethal catatonia, and autonomic and breathing instability. The outcome can be much improved with accurate diagnosis and early treatment using adequate immunosuppressive therapy. However, since the neurological and psychiatric symptoms as well as the clinical examination results can be non-specific, the disease is probably under-recognized. Reliable and accurate clinical testing for the identification of NMDAR autoantibodies is crucial for diagnosis, timely treatment selection, and monitoring. Recently, a cell-based indirect immunofluorescent antibody test for the detection of IgG antibodies to NMDAR has become available for diagnostic use. This review highlights the progress and challenges of laboratory testing in the evaluation and management anti-NMDAR encephalitis, and perspectives for the future.