Glycogen synthase kinase-3 (GSK-3) occupies an unusual niche in cellular regulation via its negative regulation of a series of important cellular target proteins coupled with its own sensitivity to several major signaling pathways including the Wnt, Notch, Hedgehog, and insulin systems. This protein kinase thus has multiple physiological functions depending on the cell or tissue type. Mouse genetic models in which the two mammalian isoforms (known as GSK-3a and GSK-3b) have been globally or tissue-specifically inactivated or activated have revealed roles in behavior, neurodegenerative diseases, and cognition. The activity of the protein kinase is also influenced directly or indirectly by a series of neuroactive drugs including lithium and psychotropic agents. In this review, we describe the modes of regulation, the molecular targets lying downstream and the association of dysfunction of GSK-3 in various neurological disorders including bipolar disorder, schizophrenia, and neurodegeneration as well as discuss possible strategies that may target GSK-3 for therapeutic benefit.