The concepts of the neurobiology of nerve injury, fibrosis and regeneration are critical. Millions of people worldwide are affected every year by traumatic and non-traumatic forms of injury to the spinal cord or the peripheral nerves that cause huge socioeconomic burdens. Innumerable studies over the last few decades have studied the disease pathogenesis. Also, several strategies and techniques have undertaken to repair injuries in the PNS and CNS, but all have resulted in suboptimal functional outcomes. In this review, we have provided a general description of injury-induced scarring and fibrosis in the PNS and CNS. We also discuss the important signaling factors and mechanistic pathways that regulate the disease pathogenesis. We further discuss the current paradigms that suggest the involvement of essential factors in and during disease progression. We believe that readers and researchers will gain key insights into how fibrosis regulates the regenerative process in the PNS and CNS. We hope this review will help clinicians and scientists to address an unmet medical need and direct further studies towards the identification of better therapeutic approaches.