Neddylation, a posttranslational protein modification, refers to the specific conjugation of NEDD8 to substrates, which is of great significance to various biological processes. Besides members of the cullin protein family, other key proteins can act as a substrate for neddylation modification, which remarkably influences neurodevelopment and neurodegenerative diseases. Normal levels of protein neddylation contribute to nerve growth, synapse strength, neurotransmission, and synaptic plasticity, whereas overactivation of protein neddylation pathways lead to apoptosis, autophagy of neurons, and tumorigenesis. Furthermore, impaired neddylation causes neurodegenerative diseases. These facts suggest that neddylation may be a target for treatment of these diseases. This review focuses on the current understanding of neddylation function in neurodevelopment as well as neurodegenerative diseases. Meanwhile, the recent view that different level of neddylation pathway may contribute to the opposing disease progression, such as neoplasms and Alzheimer's disease, is discussed. The review also discusses neddylation inhibitors, which are currently being tested in clinical trials. However, potential drawbacks of these drugs are noted, which may benefit the development of new pharmaceutical strategies in the treatment of nervous system diseases.