Although adenosine was identified in the brain many decades ago, our understanding of when, where, and how it functions has expanded rapidly in recent years, driven in part by innovative technological advances. Adenosine is now increasingly recognized as a key neuromodulator that dynamically regulates brain circuits important for sleep/wakefulness, movement, cognition, and homeostasis. In addition, growing attention has been directed toward the molecular mechanisms governing adenosine production and its downstream signaling pathways, both of which hold great promise as therapeutic targets for neuropsychiatric disorders and neurodegenerative diseases. This review highlights recent progress in detecting adenosine, unraveling its signaling pathways in vitro and in vivo, and understanding how it regulates brain function under physiological and pathological conditions.