The goal of this review is the presentation of the new (Bulat-Klarica-Orešković) hypothesis of cerebrospinal fluid (CSF) physiology and the ensuing new concept of hydrocephalus development in light of this hypothesis. The widely accepted classic hypothesis of CSF physiology and the traditional concept of hydrocephalus are contradicted by numerous experimental and clinical data, which consequently results in unsatisfying clinical treatment and patient recovery. Therefore, the newly presented concept of hydrocephalus development and possible future treatments are discussed. A new definition suggests that hydrocephalus is a pathological state in which CSF is excessively accumulated inside the cranial part of the CSF system, predominantly in one or more brain ventricles as a consequence of impaired hydrodynamics of intracranial fluids between CSF, brain, and blood compartments.