Neurons have exceptionally high energy demands, sustained by thousands to millions of mitochondria per cell. Each mitochondrion depends on the integrity of its mitochondrial DNA (mtDNA), which encodes essential electron transport chain (ETC) subunits required for oxidative phosphorylation (OXPHOS). The continuous, high-level production of ATP through OXPHOS generates reactive oxygen species (ROS), posing a significant threat to the highly exposed mtDNA. To counter these insults, neurons rely on base excision repair (BER), the principal mechanism for removing oxidative and other small, non-bulky base lesions in nuclear and mtDNA. BER involves a coordinated enzymatic pathway that excises damaged bases and restores DNA integrity, helping maintain mitochondrial genome stability, which is vital for neuronal bioenergetics and survival. When mitochondrial BER is impaired, mtDNA becomes unstable, leading to ETC dysfunction and a self-perpetuating cycle of bioenergetic failure, elevated ROS levels, and continued mtDNA damage. Damaged mtDNA fragments can escape into the cytosol or extracellular space, where they act as damage-associated molecular patterns (DAMPs) that activate innate immune pathways and inflammasome complexes. Chronic activation of these pathways drives sustained neuroinflammation, exacerbating mitochondrial dysfunction and neuronal loss, and functionally links genome instability to innate immune signaling in neurodegenerative diseases. This review summarizes recent advancements in understanding how BER preserves mitochondrial genome stability, affects neuronal health when dysfunctional, and contributes to damage-driven neuroinflammation and neurodegenerative disease progression. We also explore emerging therapeutic strategies to enhance mtDNA repair, optimize its mitochondrial environment, and modulate neuroimmune pathways to counteract neurodegeneration.