The monovalent cation lithium partially exerts its effects by activating neurotrophic and neuroprotective cellular cascades. Here, we discuss the effects of lithium on oxidative stress, programmed cell death (apoptosis), inflammation, glial dysfunction, neurotrophic factor functioning, excitotoxicity, and mitochondrial stability. In particular, we review evidence demonstrating the action of lithium on cyclic adenosine monophosphate (cAMP)-mediated signal transduction, cAMP response element binding activation, increased expression of brain-derived neurotrophic factor, the phosphatidylinositide cascade, protein kinase C inhibition, glycogen synthase kinase 3 inhibition, and B-cell lymphoma 2 expression. Notably, we also review data from clinical studies demonstrating neurotrophic effects of lithium. We expect that a better understanding of the clinically relevant pathophysiological targets of lithium will lead to improved treatments for those who suffer from mood as well as neurodegenerative disorders.