Nervous system infection with Borrelia burgdorferi frequently causes meningitis and rarely causes encephalomyelitis. Altered cognitive function also can occur in the absence of central nervous system infection. Recently developed serodiagnostic tools, such as the C6 assay, and appropriate use of Western blotting, promise to improve diagnostic accuracy. Treatment trials have demonstrated the efficacy of relatively brief courses of oral antimicrobial agents, even in peripheral nervous system infection and meningitis. Several well-performed studies have clearly shown that prolonged antimicrobial treatment of "post-Lyme disease" is ineffective. Diagnosis and treatment of Lyme disease continue to improve.