The habenula (Hb) (from the Latin, little rein) is a phylogenetically old structure located in the dorsomedial portion of the thalamus and is an important link between the forebrain and brainstem monoaminergic nuclei. The Hb includes 2 subdivisions—lateral and medial—which differ in their neurochemical characteristics and connectivity. The lateral Hb receives inputs from the cerebral cortex, lateral hypothalamus, and globus pallidus (GP) and exerts an inhibitory modulation both on dopaminergic neurons of the substantia nigra pars compacta (SNc) and ventral tegmental area (VTA) and on serotonergic neurons of the median and dorsal raphe nuclei. This inhibitory effect is primarily mediated by γ-aminobutyric acid (GABA)ergic neurons located in the rostromedial tegmental nucleus (RMTg). The medial Hb receives its main inputs from the medial septum and projects to the interpeduncular nucleus (IPN), which in turn controls the activity of monoaminergic brainstem nuclei. Via all these connections, the Hb has a major role in emotional regulation of behavior. For example, the lateral Hb processes negative emotional state information (including disappointment, punishment, and pain) and inhibits the SNc/VTA neurons involved in learning and motivation. Both the lateral Hb and the medial Hb may also participate in sleep regulation, pain modulation, and the mechanism of drug addiction. Neuroimaging studies allow identification of the Hb and its main connections in humans, and showed its activation in response to negative emotions or pain. The increasing interest in the physiology of the Hb and its involvement in neurologic and psychiatric disease is reflected by a large number of recent reviews.