Brain edema is excess accumulation of water in intracellular or extracellular spaces of the brain. It may be due to traumatic brain injury, neoplasm, infection, or following surgery. Advent of electron microscope and molecular pathophysiology of fluid transport through blood–brain barrier has elucidated the mechanism of edema formation, that is, ion channels and transport of fluid into extracellular space. Currently approved treatments, such as decompressive craniectomy and osmotherapy, controlled hyperventilation, and administration of diuretics, were developed prior to any knowledge of modern cerebral edema pathophysiology. These therapies attempt to manage downstream end-stage events without directly attenuating the underlying molecular mechanisms of cerebral edema. Next few years will yield new knowledge of how particular proteins drive edema influx, paving the way for rationally designed therapeutics that directly target key steps in cerebral edema formation, thereby achieving what currently approved therapies do not. Pharmacological agents which can block edema formation are being tried experimentally and clinically. Development in imaging, that is, computed tomography and diffusion tensor magnetic resonance imaging, has helped in antemortem assessment of evolution and resolution of brain edema as a dynamic pathophysiology. Animal studies shows release of vasoactive substances, that is, histamine, serotonin, adrenaline, nitric oxide, substance P, prostaglandins, tumor necrosis factor-α, and cytokines, in the injured brain results in activation of inflammatory cascade, which is the important cause of brain edema.