From the middle of 1990's, there repeated in winter season an outbreak of encephalopathy in Japan that appeared to be associated with influenza. A national survey was conducted, and a total of 507 patients was diagnosed as having influenza-associated encephalopathy during 1998-2002 on the basis of virologic analysis. Type A influenza was more pathogenic than type B, and A: H3 type was more invasive than A: H1 type. Encephalitis developed mainly in children below 5 years of age, either on the day that influenza signs appeared or on the next day. We hypothesized that the replicated viruses at nasopharyngeal epithelium disrupt the olfactory mucosa. Via olfactory nerve system, the stimuli may be transmitted to the brain eventually to activate glial cells, and to induce the production of pro-inflammatory cytokines. The cytokine storm results in neural cell damage as well as apoptosis of glial cells due to TNF-induced mitochondrial respiratory failure. The disruption of blood-brain barrier progresses to the systemic cytokine storm, resulting in DIC and MOF.