The translocator protein (TSPO) is an outer mitochondrial membrane protein that is widely used as a biomarker of neuroinflammation, being markedly upregulated in activated microglia in a range of brain pathologies. Despite its extensive use as a target in molecular imaging studies, the exact cellular functions of this protein remain in question. The long-held view that TSPO plays a fundamental role in the translocation of cholesterol through the mitochondrial membranes, and thus, steroidogenesis, has been disputed by several groups with the advent of TSPO knockout mouse models. Instead, much evidence is emerging that TSPO plays a fundamental role in cellular bioenergetics and associated mitochondrial functions, also part of a greater role in the innate immune processes of microglia. In this review, we examine the more direct experimental literature surrounding the immunomodulatory effects of TSPO. We also review studies which highlight a more central role for TSPO in mitochondrial processes, from energy metabolism, to the propagation of inflammatory responses through reactive oxygen species (ROS) modulation. In this way, we highlight a paradigm shift in approaches to TSPO functioning.