Prosaposin, a 66 kDa glycoprotein, was identified initially as the precursor of the sphingolipid activator proteins, saposins A-D, which are required for the enzymatic hydrolysis of certain sphingolipids by lysosomal hydrolases. While mature saposins are distributed to lysosomes, prosaposin exists in secretory body fluids and plasma membranes. In addition to its role as the precursor, prosaposin shows a variety of neurotrophic and myelinotrophic activities through a receptor-mediated mechanism. In studies in vivo, prosaposin was demonstrated to exert a variety of neuro-efficacies capable of preventing neuro-degeneration following neuro-injury and promoting the amelioration of allodynia and hyperalgesia in pain models. Collective findings indicate that prosaposin is not a simple house-keeping precursor protein; instead, it is a protein essentially required for the development and maintenance of the central and peripheral nervous systems. Accumulating evidence over the last decade has attracted interests in exploring and developing new therapeutic approaches using prosaposin for human disorders associated with neuro-degeneration. In this review we detail the structure characteristics, cell biological feature, in vivo efficacy, and neuro-therapeutic potential of prosaposin, thereby providing future prospective in clinical application of this multifunctional protein.