Familiarity is a pivotal construct in neuroscience that shapes many cognitive processes, ranging from recognition memory and habit development to social interactions, decision-making and creativity. Since familiarity is a complex and broad construct, the present article aims to review its key dimensions and underlying neural mechanisms by integrating evidence from neuroscience and psychology to highlight its crucial role in shaping cognitive processes and behavior. In this framework, familiarity operates through multilevel neural adaptations, such as synaptic changes and reorganization of circuits and networks, as well as neuromodulatory systems that balance the exploitation of the familiar and exploration of the new. Familiarity thus allows rapid and efficient information processing, saving cognitive resources and fostering a sense of safety. However, this economy may become a constraint, reducing cognitive and behavioral flexibility and biasing selection toward exploitation over exploration. Accordingly, familiarity is a double-edged sword.