Mitogen-activated protein kinase phosphatase (MKP)-1 provides a negative feedback mechanism for regulating mitogen-activated protein kinase (MAPK) activity and thus a variety of cellular processes such as proliferation, differentiation, growth and apoptosis. MKP-1 is established as a central regulator of a variety of functions in the immune, metabolic and cardiovascular systems and it is now increasingly acknowledged as having a role to play in the nervous system. It has been implicated in regulating processes of neuronal cell development and death as well as in glial cell function. Reduced MKP-1 levels have been observed in models of neurological conditions including Huntington’s disease, Multiple Sclerosis, ischemia and cerebral hypoxia. It has also been suggested to have a role to play in psychiatric disorders such as major depressive disorder, chronic social stress and in post-traumatic stress disorder. Here we discuss the role of MKP-1 in nervous system development and disease and examine current evidence providing insight into MKP-1 as a potential therapeutic target for various diseases of the central nervous system.