Modafinil is a psychostimulant drug approved by the FDA primarily for the treatment of sleep disorders such as narcolepsy, excessive daytime sleepiness and sleep apnea. Several documented but not yet approved uses for modafinil have been described over the last 30 years, including alleviating fatigue in neurological and neuro-degenerative disorders. Recent evidence has suggested that modafinil may have an immunomodulatory effect. Here, we review the different effects of modafinil treatment in animal models of brain inflammation and peripheral immune function. We conclude that there is unequivocal evidence of an anti-inflammatory effect of modafinil in experimental animal models of brain inflammation and neurodegenerative disorders, including systemic inflammation and methamphetamine-induced neuroinflammation, Parkinsons disease, brain ischemia, and multiple sclerosis. Modafinil acts on resident glial cells and infiltrating immune cells, negatively affecting both innate and adaptive immune responses in the brain. We also review the outcomes of modafinil treatment on peripheral immune function. The results of studies on this subject are still controversial and far from conclusive, but point to a new avenue of research in relation to peripheral inflammation. The data reviewed here raise the possibility of modafinil being used as adjuvant treatment for neurological disorders in which inflammation plays an important role.