Neonatal jaundice, a physiologic condition reflecting the interplay between developmentally modulated changes in bilirubin production and metabolism, affects virtually all newborn infants. Usually, it is an entirely benign process that is resolved at the end of the first week of life without treatment or sequelae. However, in a small percentage of neonates, unconjugated hyperbilirubinemia can pose a neurotoxic risk especially in the presence of aggravating conditions such as a diminished albumin binding capacity and/or affinity, acidosis, displacing drugs and prematurity. Although neuronal cells are considered the main target for unconjugated bilirubin (UCB) toxicity, circulating cells are also affected during neonatal hyperbilirubinemia. Moreover, the UCB ability to cause hemolysis shall further aggravate neonatal jaundice through a vicious circle. In this review, we summarize the most relevant data obtained by our group regarding UCB toxicity and the role of some risk factors for kernicterus. In order to improve the risk assessment of neurotoxicity it is essential to understand the underlying mechanisms of UCB pathophysiology.