Lipids in nervous system are of particular interest because of the high concentration of lipids in brain, second only to adipose tissue, of which a major part is found in myelin. These lipids are involved in the structure of cell membranes in the brain and display a variety of biological functions to maintain vital cellular processes at various levels: work as energy source, serve as signaling molecules, and withstand structural integrity of cellular compartment and membranes. Lipids in the form of fatty acids participate actively in the development of the nervous system at embryonic and early postnatal stage and are crucial for its maintenance throughout adulthood. The involvement of deregulated metabolism of lipids in many nervous system disorders, pathological conditions and injuries underscores the importance of lipids in maintaining normal cell signaling and tissue physiology. The correction of altered lipid levels by exogenous supply is considered as a most promising therapeutic approach. It is believed that they contribute in their own right by as yet incompletely understood mechanisms to those pathological processes. This article attempts to provide an overview of the lipid imbalances associated with CNS injury (traumatic brain injury, stroke, and spinal cord injury), neurological disorders (schizophrenia, anxiety, and depressive illnesses), and neurodegenerative disorders (Alzheimer's disease, Parkinson's disease, and multiple sclerosis). Fatty acids as biomarkers of diseases are briefly discussed as well as their therapeutic potential which will provide new insights to exploit these lipids to open new avenues for improving brain health, prevention, and treatment of nervous system disorders.