Background We evaluated the dynamics of hepatic encephalopathy (HE) and ammonia estimation in acute-on-chronic liver failure (ACLF) patients due to a paucity of evidence. Methods ACLF patients recruited from the APASL-ACLF Research Consortium (AARC) were followed up till 30 days, death or transplantation, whichever earlier. Clinical details, including dynamic grades of HE and laboratory data, including ammonia levels, were serially noted. Results Of the 3009 ACLF patients, 1315 (43.7%) had HE at presentation; grades I-II in 981 (74.6%) and grades III-IV in 334 (25.4%) patients. The independent predictors of HE at baseline were higher age, systemic inflammatory response, elevated ammonia levels, serum protein, sepsis and MELD score (p < 0.05; each). The progressive course of HE was noted in 10.0% of patients without HE and 8.2% of patients with HE at baseline, respectively. Independent predictors of progressive course of HE were AARC score (>= 9) and ammonia levels (>= 85 mu mol/L) (p < 0.05; each) at baseline. A final grade of HE was achieved within 7 days in 70% of patients and those with final grades III-IV had the worst survival (8.9%). Ammonia levels were a significant predictor of HE occurrence, higher HE grades and 30-day mortality (p < 0.05; each). The dynamic increase in the ammonia levels over 7 days could predict nonsurvivors and progression of HE (p < 0.05; each). Ammonia, HE grade, SIRS, bilirubin, INR, creatinine, lactate and age were the independent predictors of 30-day mortality in ACLF patients. Conclusions HE in ACLF is common and is associated with systemic inflammation, poor liver functions and high disease severity. Ammonia levels are associated with the presence, severity, progression of HE and mortality in ACLF patients.