There is an imperious need of redefining placebo effect in contemporary times. The effects of sham medical intervention, combined with a careful observation of the natural evolution of a disease, could reveal the true efficiency and impact of active drugs. This interest is not driven only by a scientific curiosity, but also by the pragmatic fact that the standard process of approving new medicines through supportive clinical trials requires a comparison against placebo. A complete understanding of the placebo effect should include both its psychological mechanisms and the underlying neurobiology. In contrast to other type of conditions, neurological disorders could provide specific clues in understanding the placebo effect, since the pathogenic mechanisms of different diseases might interfere with neuronal circuitry involved in the perception of disease symptoms. However, there are ethical considerations dictating the limits of using placebo. This paper reviews recent articles about placebo effect, with an emphasis on its importance in several neurological conditions (Parkinson's disease, neuropathic pain, headache, multiple sclerosis, epilepsy), and intends to offer new insights on this major topic.