Previous studies on the mechanisms of peripheral nerve injury (PNI) have mainly focused on the pathophysiological changes within a single injury site. However, recent studies have indicated that within the central nervous system, PNI can lead to changes in both injury sites and target organs at the cellular and molecular levels. Therefore, the basic mechanisms of PNI have not been comprehensively understood. Although electrical stimulation was found to promote axonal regeneration and functional rehabilitation after PNI, as well as to alleviate neuropathic pain, the specific mechanisms of successful PNI treatment are unclear. We summarize and discuss the basic mechanisms of PNI and of treatment via electrical stimulation. After PNI, activity in the central nervous system (spinal cord) is altered, which can limit regeneration of the damaged nerve. For example, cell apoptosis and synaptic stripping in the anterior horn of the spinal cord can reduce the speed of nerve regeneration. The pathological changes in the posterior horn of the spinal cord can modulate sensory abnormalities after PNI. This can be observed in cases of ectopic discharge of the dorsal root ganglion leading to increased pain signal transmission. The injured site of the peripheral nerve is also an important factor affecting post-PNI repair. After PNI, the proximal end of the injured site sends out axial buds to innervate both the skin and muscle at the injury site. A slow speed of axon regeneration leads to low nerve regeneration. Therefore, it can take a long time for the proximal nerve to reinnervate the skin and muscle at the injured site. From the perspective of target organs, long-term denervation can cause atrophy of the corresponding skeletal muscle, which leads to abnormal sensory perception and hyperalgesia, and finally, the loss of target organ function. The mechanisms underlying the use of electrical stimulation to treat PNI include the inhibition of synaptic stripping, addressing the excessive excitability of the dorsal root ganglion, alleviating neuropathic pain, improving neurological function, and accelerating nerve regeneration. Electrical stimulation of target organs can reduce the atrophy of denervated skeletal muscle and promote the recovery of sensory function. Findings from the included studies confirm that after PNI, a series of physiological and pathological changes occur in the spinal cord, injury site, and target organs, leading to dysfunction. Electrical stimulation may address the pathophysiological changes mentioned above, thus promoting nerve regeneration and ameliorating dysfunction.