Neurodegenerative and neuropsychiatric illnesses are prevalent and life-threatening disorders characterized by a wide range of clinical syndromes and comorbidities, all of which have complex origins and share common molecular pathomechanisms. Although the pathophysiology of neurological illnesses is not completely understood, researchers have discovered that several ion channels and signalling pathways may have played a role in disease pathogenesis. Active substances from Astragalus sp. are being employed for nutrition, and their usefulness in the treatment of neurological illnesses is receiving more attention. Because their extracts and active components exert different pharmacological effects on a variety of ailments, they have a long history of usage as a cure for various diseases. This review summarizes the research work on Astragalus and their biologically active constituents as potential candidates for the protection against and treatment of neurodegenerative and neuropsychiatric disorders to show the potential efficacy of Astragalus sp. and its active ingredients in treating some neurological diseases. Simultaneously, the chemical structures of these active compounds, their sources, biological properties, and mechanisms are also listed. In ethnopharmacological applications, Astragalus membranaceus and spinosus have been studied as traditional medicines worldwide. The chemical constituents of Astragalus species mainly comprise terpenoids, flavonoids, and polysaccharides. The extracts and phytochemical compounds of Astragalus species exhibit various pharmacological activities, including antioxidant, anti-inflammatory, anticancer, antitumor, anticonvulsive, immunomodulatory, and other activities. Based on the current literature, we conclude that Astragalus is a promising dietary herb with multiple potential signal modulating applications that mainly include the modulation of neurotransmitters and receptors, anti-inflammatory activities, inhibition of amyloid aggregation, induction of myelin sheath repair and neurogenesis, as well as activation of the signalling pathways relevant to neurological diseases.