Progranulin, a secreted glycoprotein, is encoded in humans by the single GRN gene. Progranulin consists of seven and a half, tandemly repeated, non-identical copies of the 12 cysteine granulin motif. Many cellular processes and diseases are associated with this unique pleiotropic factor that include, but are not limited to, embryogenesis, tumorigenesis, inflammation, wound repair, neurodegeneration and lysosome function. Haploinsufficiency caused by autosomal dominant mutations within the GRN gene leads to frontotemporal lobar degeneration, a progressive neuronal atrophy that presents in patients as frontotemporal dementia. Frontotemporal dementia is an early onset form of dementia, distinct from Alzheimer’s disease. The GRN-related form of frontotemporal lobar dementia is a proteinopathy characterized by the appearance of neuronal inclusions containing ubiquitinated and fragmented TDP-43 (encoded by TARDBP). The neurotrophic and neuro-immunomodulatory properties of progranulin have recently been reported but are still not well understood. Gene delivery of GRN in experimental models of Alzheimer’s- and Parkinson’s-like diseases inhibits phenotype progression. Here we review what is currently known concerning the molecular function and mechanism of action of progranulin in normal physiological and pathophysiological conditions in both in vitro and in vivo models. The potential therapeutic applications of progranulin in treating neurodegenerative diseases are highlighted.