Autoimmune encephalitis (AE) is an inflammatory disease of the central nervous system characterized by the production of various autoimmune antibodies targeting neuronal proteins. The pathogenesis of AE remains elusive. Accumulating evidence suggests that lymphocytes, particularly B and T lymphocytes, play an integral role in the development of AE. In the last two decades, autoimmune neural antibodies have taken center stage in diagnosing AE. Recently, increasing evidence has highlighted the importance of T lymphocytes in the onset of AE. CD4+ T cells are thought to influence disease progression by secreting associated cytokines, whereas CD8+ T cells exert a cytotoxic role, causing irreversible damage to neurons mainly in patients with paraneoplastic AE. Conventionally, the first-line treatments for AE include intravenous steroids, intravenous immunoglobulin, and plasma exchange to remove pathogenic autoantibodies. However, a minority of patients are insensitive to conventional first-line treatment protocols and suffer from disease relapse, a condition referred to as refractory AE. In recent years, new treatments, such as rituximab or CAAR-T, which target pathogenic lymphocytes in patients with AE, have offered new therapeutic options for refractory AE. This review aims to describe the current knowledge about the function of B and T lymphocytes in the pathophysiology of AE and to summarize and update the immunotherapy options for treating this disease.