Neuroticism (N) is believed to reflect a stable disposition involving specific biological and psychological mechanisms that produce its robust association with psychopathology. The nature of these mechanisms remains unclear, however. Based on an extensive review of published evidence, we argue that three interesting leads are emerging. First, N may reflect individual differences in brain circuits involved in perception of and cognitive control over negative stimuli. More specifically, reduced connectivity between the left amygdala and ACC may impair extinction of the amygdala response to anxiety-eliciting stimuli. Second, the neural evidence matches the psychological findings, which associate N with a negative bias in attention, interpretation and recall of information, increased reactivity, and ineffective coping, and is consistent with findings of decreased cardiovascular flexibility. Third, current studies suggest that HPA-axis influences mood independently of N. Strong claims on N's biological basis, however, are not yet justified due to inconsistencies and lack of replication which are in part due to methodological limitations and N's heterogeneity. We discuss potential methodological improvements and substantive directions for future research.