Translocator protein (TSPO, 18 kDa), formerly known as peripheral benzodiazepine receptor, is an evolutionary well-conserved protein located on the outer mitochondrial membrane. TSPO is involved in a variety of fundamental physiological functions and cellular processes. Its expression levels are regulated under many pathological conditions, therefore, TSPO has been proposed as a tool for diagnostic imaging and an attractive therapeutic drug target in the nervous system. Several synthetic TSPO ligands have thus been explored as agonists and antagonists for innovative treatments as neuroprotective and regenerative agents. In this review, we provide state-of-the-art knowledge of TSPO functions in the brain and peripheral nervous system. Particular emphasis is placed on its contribution to important physiological functions such as mitochondrial homeostasis, energy metabolism and steroidogenesis. We also report how it is involved in neuroinflammation, brain injury and diseases of the nervous system.