Hepatic encephalopathy (HE) is a multifactorial neuropsychiatric disease that affects patients with cirrhosis. We review the clinical impact, pathogenesis, evaluation, management, and prevention of overt HE in patients with cirrhosis. Articles published between January 1960 and November 2012 were acquired through a MEDLINE search of different combinations of the terms hepatic encephalopathy, pathophysiology, treatment, prophylaxis, prevention, prognosis, and recurrence. The Healthcare Cost and Utilization Project database was used to obtain prevalence and cost information related to hospitalizations of patients with HE. The literature describes significant morbidity and mortality of HE in patients with cirrhosis. Overt HE develops in 30% to 45% of patients with cirrhosis and is associated with a substantial pharmacoeconomic burden, particularly HE-related hospitalizations. The development of HE in patients with cirrhosis portends a worsened prognosis and is incorporated into the Child-Pugh classification of the severity of liver disease. In the hospitalized patient, the development of HE is associated with precipitating events (eg, gastrointestinal bleeding, dehydration, infection), and in some patients, its course is characterized by frequent and severe relapses. In addition, hospitalized patients with overt HE have a 3.9-fold increased mortality risk. Patient management employs nonabsorbable disaccharides, the nonsystemic antibiotic rifaximin, or both, to treat acute HE episodes and prevent HE relapse. In open-label trials, use of the nonabsorbable disaccharide lactulose reduced the risk of overt HE recurrence in patients compared with no-lactulose control groups for ≤ a median of 14 months. In a randomized, placebo-controlled trial, rifaximin 550 mg twice daily was more effective in maintaining HE remission compared with placebo and was associated with a reduction in HE-related hospitalizations. Recent advances in treatment and preventative therapies may reduce the personal, societal, and economic impact of this disorder.