Encephalopathy: Disease, damage, or malfunction of the brain. In general, encephalopathy is manifested by an altered mental state that is sometimes accompanied by physical changes.Although numerous causes of encephalopathy are known, the majority of cases arise from infection, liver damage, anoxia, or kidney failure.n general, encephalopathy is manifested by an altered mental state that is sometimes accompanied by physical changes. Although numerous causes of encephalopathy are known, the majority of cases arise from infection, liver damage, anoxia, or kidney failure.