Eukaryotes have evolved a variety of mRNA surveillance mechanisms to detect and degrade aberrant mRNAs with potential deleterious outcomes. Among them, nonsense-mediated mRNA decay (NMD) functions not only as a quality control mechanism targeting aberrant mRNAs containing a premature termination codon but also as a posttranscriptional gene regulation mechanism targeting numerous physiological mRNAs. Despite its well-characterized molecular basis, the regulatory scope and biological functions of NMD at an organismal level are incompletely understood. In humans, mutations in genes encoding core NMD factors cause specific developmental and neurological syndromes, suggesting a critical role of NMD in the central nervous system. Here, we review the accumulating biochemical and genetic evidence on the developmental regulation and physiological functions of NMD as well as an emerging role of NMD dysregulation in neurodegenerative diseases.