Anti-N-methyl-D-aspartate receptor (anti-NMDAR) encephalitis is a severe autoimmune encephalitis characterized by antibodies directed against the GluN1 subunit of the NMDA receptor, resulting in receptor internalization, synaptic dysfunction, and widespread neuropsychiatric disturbances. Since its original description by Dalmau and colleagues in 2007 in women with ovarian teratomas presenting with psychiatric symptoms, dyskinesias, seizures, autonomic dysfunction, and altered consciousness, anti-NMDAR encephalitis has emerged as one of the most frequently recognized forms of autoimmune encephalitis worldwide. Increasing awareness, improvements in cerebrospinal fluid (CSF) antibody assays, and advances in neuroimmunology have substantially improved diagnosis and outcomes, although diagnostic delays remain common because psychiatric manifestations frequently precede neurological symptoms and may mimic schizophrenia, bipolar disorder, catatonia, or primary psychosis. The pathogenesis involves IgG autoantibodies targeting extracellular epitopes of the GluN1 receptor subunit, producing receptor cross-linking and internalization without major neuronal destruction, thereby explaining the potentially reversible nature of the disease. Tumor-associated immune activation, particularly ovarian teratomas, viral triggers including herpes simplex encephalitis, genetic susceptibility, blood–brain barrier dysfunction, and neuroinflammatory cascades collectively contribute to disease initiation and progression. The neurobiology of anti-NMDAR encephalitis extends beyond receptor depletion and includes alterations in glutamatergic signaling, limbic circuitry dysfunction, cortical-subcortical disconnection, dysregulated synaptic plasticity, and disturbances in learning, memory, executive function, and autonomic regulation. This descriptive review synthesizes current evidence to comprehensively examine genetics, molecular genetics, classifications, epidemiology, pathogenesis, neurobiology, neurophysiology, immunopathology, clinical manifestations, diagnosis, differential diagnoses, treatment strategies, prognosis, limitations, and future directions. Particular emphasis is placed on molecular mechanisms, neuroimmune interactions, tumor-associated disease, psychiatric overlap, and emerging therapeutic approaches. The review highlights that early diagnosis, prompt immunotherapy, tumor removal when indicated, and multidisciplinary rehabilitation remain critical determinants of favorable neurological recovery.