Modafinil is a central nervous system wake promoting agent used for the treatment of excessive daytime sleeping. Its vigilance promoting properties and low abuse potential has intrigued the scientific community and has led to use it as a cognitive enhancer, before its neural functions were understood. Here, we review the effects of modafinil in human cognition and emotion and its specific actions on symptoms in patients with schizophrenia and whether these are consistently effective throughout the literature. We also performed a systematic review on the effects of modafinil on neurotransmitter signalling in different areas of the brain in order to better understand the neuromechanisms of its cognitive and emotional enhancing properties. A review of its effects in schizophrenia suggests that modafinil facilitates cognitive functions, with pro-mnemonic effects and problem solving improvements. Emotional processing also appears to be enhanced by the drug, although to date there are only a limited number of studies. The systematic review on the neurochemical modulation of the modafinil suggests that its mnemonic enhancing properties might be the result of glutamatergic and dopaminergic increased neuronal activation in the hippocampus and in the prefrontal cortex respectively. Other neurotransmitters were also activated by modafinil in various limbic brain areas, suggesting that the drug acts on these brain regions to influence emotional responses. These reviews seek to delineate the neuronal mechanisms by which modafinil affects cognitive and emotional function. This article is part of a Special Issue entitled 'Cognitive Enhancers'.