Tinnitus is a phantom auditory perception characterized by a ringing sound in either one or both ears. It is a common disorder most often associated with hearing loss and can have a severe impact on a person's quality of life. There is currently no cure and no efficient therapeutic options. There is little known about the neural mechanisms underlying the generation of tinnitus but a better understanding of its neural basis could greatly benefit the development of efficient treatment methods. This literature study aims to explore the neural mechanisms of tinnitus in terms of generation, perpetuation, and perception. Cochlear dysfunction, changes in neuronal firing rates and oscillatory properties, hyperactivity, lack of inhibitory activity and plasticity in auditory-limbic structures have been associated with tinnitus and may be a part of a crossmodal network involved in generating, perpetuating and perceiving tinnitus, through maladaptive CNS plasticity. New developing treatment methods aim to modulate and re-route tinnitus-related plasticity, however, this leads to treatment difficulties due to the crossmodal nature of the tinnitus pathophysiology. These difficulties will be further examined in the discussion.