In addition to its central roles in protein quality control, regulation of cell cycle, intracellular signaling, DNA damage response and transcription regulation, the ubiquitin-proteasome system (UPS) plays specific roles in the nervous system, where it contributes to precise connectivity through development, and later assures functionality by regulating a wide spectrum of neuron-specific cellular processes. Aberrations in this system have been implicated in the etiology of neurodevelopmental and neurodegenerative diseases. In this review, we provide an updated view on the UPS and highlight recent findings concerning its role in normal and diseased nervous systems. We discuss the advantages of the model organism Caenorhabditis elegans as a tool to unravel the major unsolved questions concerning this biochemical pathway and its involvement in nervous system function and dysfunction, and expose the new possibilities, using state-of-the-art techniques, to assess UPS function using this model system.