The most common treatment for hydrocephalus is placement of a cerebrospinal fluid shunt to supplement or replace lost drainage capacity. Shunts are life-saving devices but are notorious for high failure rates, difficulty of diagnosing failure, and limited control options. Shunt designs have changed little since their introduction in 1950s, and the few changes introduced have had little to no impact on these long-standing problems. For decades, the community has envisioned a “smart shunt” that could provide advanced control, diagnostics, and communication based on implanted sensors, feedback control, and telemetry. The most emphasized contribution of smart shunts is the potential for advanced control algorithms, such as weaning from shunt dependency and personalized control. With sensor-based control comes the opportunity to provide data to the physician on patient condition and shunt function, perhaps even by a smart phone. An often ignored but highly valuable contribution would be designs that correct the high failure rates of existing shunts. Despite the long history and increasing development activity in the past decade, patients are yet to see a commercialized smart shunt. Most smart shunt development focuses on concepts or on isolated technical features, but successful smart shunt designs will be a balance between technical feasibility, economic viability, and acceptable regulatory risk. Here, we present the status of this effort and a framework for understanding the challenges and opportunities that will guide introduction of smart shunts into patient care.