Currently, 47 million people live with dementia globally, and it is estimated to increase more than threefold (~131 million) by 2050. Alzheimer’s disease (AD) is one of the major causative factors to induce progressive dementia. AD is a neurodegenerative disease, and its pathogenesis has been attributed to extracellular aggregates of amyloid β (Aβ) plaques and intracellular neurofibrillary tangles made of hyperphosphorylated τ-protein in cortical and limbic areas of the human brain. It is characterized by memory loss and progressive neurocognitive dysfunction. The anomalous processing of APP by β-secretases and γ-secretases leads to production of Aβ 40 and Aβ 42 monomers, which further oligomerize and aggregate into senile plaques. The disease also intensifies through infectious agents like HIV. Additionally, during disease pathogenesis, the presence of high concentrations of Aβ peptides in central nervous system initiates microglial infiltration. Upon coming into vicinity of Aβ, microglia get activated, endocytose Aβ, and contribute toward their clearance via TREM2 surface receptors, simultaneously triggering innate immunoresponse against the aggregation. In addition to a detailed report on causative factors leading to AD, the present review also discusses the current state of the art in AD therapeutics and diagnostics, including labeling and imaging techniques employed as contrast agents for better visualization and sensing of the plaques. The review also points to an urgent need for nanotechnology as an efficient therapeutic strategy to increase the bioavailability of drugs in the central nervous system.