Infrared (IR) neuromodulation (INM) is an emerging light-based neuromodulation approach that can reversibly control neuronal and muscular activities through the transient and localized deposition of pulsed IR light without requiring any chemical or genetic pre-treatment of the target cells. Though the efficacy and short-term safety of INM have been widely demonstrated in both peripheral and central nervous systems, the investigations of the detailed cellular and biological processes and the underlying biophysical mechanisms are still ongoing. In this review, we discuss the current research progress in the INM field with a focus on the more recently discovered IR nerve inhibition. Major biophysical mechanisms associated with IR nerve stimulation are summarized. As the INM effects are primarily attributed to the spatiotemporal thermal transients induced by water and tissue absorption of pulsed IR light, temperature monitoring techniques and simulation models adopted in INM studies are discussed. Potential translational applications, current limitations, and challenges of the field are elucidated to provide guidance for future INM research and advancement.