Prosaposin (also known as SGP-1) is an intriguing multifunctional protein that plays roles both intracellularly, as a regulator of lysosomal enzyme function, and extracellularly, as a secreted factor with neuroprotective and glioprotective effects. Following secretion, prosaposin can undergo endocytosis via an interaction with the low-density lipoprotein-related receptor 1 (LRP1). The ability of secreted prosaposin to promote protective effects in the nervous system is known to involve activation of G proteins, and the orphan G protein-coupled receptors GPR37 and GPR37L1 have recently been shown to mediate signaling induced by both prosaposin and a fragment of prosaposin known as prosaptide. In this review, we describe recent advances in our understanding of prosaposin, its receptors and their importance in the nervous system.