Autoimmune neuroinflammatory diseases, including multiple sclerosis (MS) and autoimmune encephalitis (AE), are characterized by dysregulated immune activity within the central nervous system that leads to both neurological and psychiatric symptoms. While MS is typically a chronic condition indicated by demyelination and progressive neurodegeneration, AE often presents more acutely through antibody-mediated disruption of synaptic function. Despite differences in disease course and mechanisms, both conditions highlight the significant impact of immune-mediated processes on cognition, mood, and behavior. Current treatment options primarily focus on reducing inflammation and controlling disease activity through immunomodulatory or immunosuppressive therapies. Although these approaches have improved neurological outcomes, many patients continue to experience persistent cognitive impairment and psychiatric symptoms, including depression, anxiety, and executive dysfunction. These symptoms are increasingly recognized as core features of disease rather than secondary symptoms. New research suggests that immune system activity works together with brain network changes and chronic stress to shape mental and neurological symptoms. However, these areas are often overlooked in clinical care and understudied in research. Future directions should prioritize integrating cognitive and psychiatric outcomes into clinical trials, developing biomarkers that link immune activity to neuropsychiatric symptoms, and implementing multidisciplinary treatment approaches. A more comprehensive understanding of both biological and psychosocial contributors is essential for improving long-term patient outcomes and quality of life.