Trehalose is a non-reducing disaccharide with two glucose molecules linked through an α, α-1,1-glucosidic bond. Trehalose has received attention for the past few decades for its role in neuroprotection especially in animal models of various neurodegenerative diseases, such as Parkinson and Huntington diseases. The mechanism underlying the neuroprotective effects of trehalose remains elusive. The prevailing hypothesis is that trehalose protects neurons by inducing autophagy, thereby clearing protein aggregates. Some of the animal studies showed activation of autophagy and reduced protein aggregates after trehalose administration in neurodegenerative disease models, seemingly supporting the autophagy induction hypothesis. However, results from cell studies have been less certain; although many studies claim that trehalose induces autophagy and reduces protein aggregates, the studies have their weaknesses, failing to provide sufficient evidence for the autophagy induction theory. Furthermore, a recent study with a thorough examination of autophagy flux showed that trehalose interfered with the flux from autophagosome to autolysosome, raising controversy on the direct effects of trehalose on autophagy. This review summarizes the fundamental properties of trehalose and the studies on its effects on neurodegenerative diseases. We also discuss the controversy related to the autophagy induction theory and seek to explain how trehalose works in neuroprotection.