Lassa fever (LF) is an acute zoonotic viral hemorrhagic disease caused by Lassa virus (LASV), an Old-World arenavirus endemic in West Africa and responsible for substantial morbidity and mortality across affected populations. Although the disease has historically been characterized by fever, hemorrhage, hepatic dysfunction, and multiorgan involvement, neurological manifestations are increasingly recognized as major determinants of disease severity and long-term disability. Among these manifestations, Lassa fever encephalitis represents one of the most severe neuroinvasive complications and may present with altered consciousness, seizures, meningoencephalitis, cerebellar dysfunction, neuropsychiatric abnormalities, and persistent neurological sequelae including sensorineural hearing loss. Recent evidence demonstrating LASV RNA within cerebrospinal fluid (CSF), including in patients without detectable serum viremia, has fundamentally altered understanding of neurological disease pathogenesis and supports direct CNS invasion with compartmentalized neuroinfection. Emerging evidence further implicates endothelial dysfunction, blood–brain barrier disruption, cytokine-mediated neurotoxicity, microglial activation, and immune dysregulation in the development of encephalitic disease. This descriptive review evaluates the epidemiology, neuropathogenesis, neuroimmunology, neuropathology, clinical spectrum, diagnosis, treatment approaches, prognosis, and future directions of Lassa fever encephalitis using literature published from 2000 to 2026. Despite advances in outbreak surveillance and molecular diagnostics, significant therapeutic limitations remain. Ribavirin continues to represent the principal antiviral intervention despite persistent uncertainty regarding efficacy in established CNS disease. Improved neurodiagnostic capability, CNS-directed therapeutics, and long-term neurological surveillance remain essential for reducing the burden associated with neuroinvasive Lassa fever.