The potential of placebo treatments to alleviate a variety of medical conditions has long been recognised. Although the placebo effect is widely known, the physiological mechanisms underlying this phenomenon are not well understood. This review focuses on the existing evidence for placebo responses in different neurological conditions, including pain, Parkinson's disease, depression, sleep and immune-mediated disorders. Special attention is paid to the neural changes associated with placebo treatments, as revealed by in vivo neurophysiological and functional neuroimaging studies. Converging evidence suggests that placebo analgesia is linked to the activation of the endogenous opioid analgesia network, whilst dopaminergic pathways seem to play a central role in the placebo effect in movement disorders and neuroimmunomodulation. Further research on the placebo response is needed, both to improve the efficacy of its application in clinical practice and to shed more light on the complexity of mind-body interactions.