Over the last six decades, lithium has been considered the gold standard treatment for the long-term management of bipolar disorder due to its efficacy in preventing both manic and depressive episodes as well as suicidal behaviors. Nevertheless, despite numerous observed effects on various cellular pathways and biologic systems, the precise mechanism through which lithium stabilizes mood remains elusive. Furthermore, there is recent support for the therapeutic potential of lithium in other brain diseases. This review offers a comprehensive examination of contemporary understanding and predominant theories concerning the diverse mechanisms underlying lithium's effects. These findings are based on investigations utilizing cellular and animal models of neurodegenerative and psychiatric disorders. Recent studies have provided additional support for the significance of glycogen synthase kinase-3 (GSK3) inhibition as a crucial mechanism. Furthermore, research has shed more light on the interconnections between GSK3-mediated neuroprotective, antioxidant, and neuroplasticity processes. Moreover, recent advancements in animal and human models have provided valuable insights into how lithium-induced modifications at the homeostatic synaptic plasticity level may play a pivotal role in its clinical effectiveness. We focused on findings from translational studies suggesting that lithium may interface with microRNA expression. Finally, we are exploring the repurposing potential of lithium beyond bipolar disorder. These recent findings on the therapeutic mechanisms of lithium have provided important clues toward developing predictive models of response to lithium treatment and identifying new biologic targets. SIGNIFICANCE STATEMENT: Lithium is the drug of choice for the treatment of bipolar disorder, but its mechanism of action in stabilizing mood remains elusive. This review presents the latest evidence on lithium's various mechanisms of action. Recent evidence has strengthened glycogen synthase kinase-3 (GSK3) inhibition, changes at the level of homeostatic synaptic plasticity, and regulation of microRNA expression as key mechanisms, providing an intriguing perspective that may help bridge the mechanistic gap between molecular functions and its clinical efficacy as a mood stabilizer., Competing Interests: E.V. has received grants and served as consultant, advisor, or CME speaker for the following entities: AB-Biotics, AbbVie, Angelini, Biogen, Biohaven, Boehringer-Ingelheim, Celon Pharma, Compass, Dainippon Sumitomo Pharma, Ethypharm, Ferrer, Gedeon Richter, GH Research, Glaxo-Smith Kline, Idorsia, Janssen, Lundbeck, Medincell, Novartis, Orion Corporation, Organon, Otsuka, Rovi, Sage, Sanofi-Aventis, Sunovion, Takeda, and Viatris outside the submitted work. G.F. has received CME-related honoraria or consulting fees from Angelini, Janssen-Cilag, and Lundbeck, Abbot. A.B. has received grants and served as a consultant for miCure Therapeutics. The other authors do not have an actual or perceived conflict of interest with the contents of this article., (U.S. Government work not protected by U.S. copyright.)