Herpes simplex virus (HSV) establishes a latent infection in the human peripheral nervous system and can cause recurrent disease by reactivation. Intensive effort has been directed in recent years to unveil the molecular, cellular and immune mechanisms, as well as the virus-host interactions associated with latent HSV infection. The aim of this review is to summarize current knowledge regarding the site of latent infection, the molecular phenomena of latency, and the mechanisms of the various stages of HSV-1 latent infection in the nervous system, relating them where possible to the human situation. Specifically, the following biological questions are addressed: (1) How does this lytic virus survive in the nervous system and why can it establish a lifelong latent infection in nerve cells? (2) What advantage is conferred on HSV by establishing latent infection in nervous tissue? (3) What can be gathered from the accumulated knowledge on latency about the pathogenesis of herpes simplex encephalitis?