Modafinil (2-[(Diphenylmethyl) sulfinyl] acetamide, Provigil) is an FDA-approved medication with wake-promoting properties. Pre-clinical studies of modafinil suggest a complex profile of neurochemical and behavioral effects, distinct from those of amphetamine. In addition, modafinil shows initial promise for a variety of off-label indications in psychiatry, including treatment-resistant depression, attention-deficit/hyperactivity disorder, and schizophrenia. Cognitive dysfunction may be a particularly important emerging treatment target for modafinil, across these and other neuropsychiatric disorders. We aimed to comprehensively review the empirical literature on neurochemical actions of modafinil, and effects on cognition in animal models, healthy adult humans, and clinical populations. We searched PubMed with the search term 'modafinil' and reviewed all English-language articles for neurochemical, neurophysiological, cognitive, or information-processing experimental measures. We additionally summarized the pharmacokinetic profile of modafinil and clinical efficacy in psychiatric patients. Modafinil exhibits robust effects on catecholamines, serotonin, glutamate, gamma amino-butyric acid, orexin, and histamine systems in the brain. Many of these effects may be secondary to catecholamine effects, with some selectivity for cortical over subcortical sites of action. In addition, modafinil (at well-tolerated doses) improves function in several cognitive domains, including working memory and episodic memory, and other processes dependent on prefrontal cortex and cognitive control. These effects are observed in rodents, healthy adults, and across several psychiatric disorders. Furthermore, modafinil appears to be well-tolerated, with a low rate of adverse events and a low liability to abuse. Modafinil has a number of neurochemical actions in the brain, which may be related to primary effects on catecholaminergic systems. These effects are in general advantageous for cognitive processes. Overall, modafinil is an excellent candidate agent for remediation of cognitive dysfunction in neuropsychiatric disorders.