Bipolar disorder (BD) is strongly associated with immune dysfunction. Replicated epidemiological studies have demonstrated that BD has high rates of inflammatory medical comorbidities, including autoimmune disorders, chronic infections, cardiovascular disease and metabolic disorders. Cytokine studies have demonstrated that BD is associated with chronic low-grade inflammation with further increases in pro-inflammatory cytokine levels during mood episodes. Several mechanisms have been identified to explain the bidirectional relationship between BD and immune dysfunction. Key mechanisms include cytokine-induced monoamine changes, increased oxidative stress, pathological microglial over-activation, hypothalamic-pituitary-adrenal (HPA) axis over-activation, alterations of the microbiome-gut-brain axis and sleep-related immune changes. The inflammatory-mood pathway presents several potential novel targets in the treatment of BD. Several proof-of-concept clinical trials have shown a positive effect of anti-inflammatory agents in the treatment of BD; however, further research is needed to determine the clinical utility of these treatments. Immune dysfunction is likely to only play a role in a subset of BD patients and as such, future clinical trials should also strive to identify which specific group(s) of BD patients may benefit from anti-inflammatory treatments.