Hepatic encephalopathy (HE) is a form of brain dysfunction that is specifically caused by liver insufficiency and/or portal-systemic shunt. The exact nature of HE is debated, so that conflicting uses of the term HE may cause inconsistencies in its detection and, in turn, issues with its management. This review highlights the meaning of the term HE on the basis of both its historical origins and current consensus. It also provides criteria for the diagnosis of the condition, on the basis of its phenotypes and the risk factors for its occurrence. The procedure for differential diagnosis from other conditions which result in similar phenotypes is considered, together with precipitants and confounders. Finally, the current multidimensional approach for the correct clinical recording of HE episodes is discussed.