It is almost a century since Dandy made the first experimental studies on hydrocephalus, but its underlying mechanism has been unknown up to now. The conventional view is that cerebrospinal fluid (CSF) malabsorption due to hindrance of the CSF circulation causes either obstructive or communicating hydrocephalus. Analyses of the intracranial hydrodynamics related to the pulse pressure show that this is an over-simplification. The new hydrodynamic concept presented here divides hydrocephalus into two main groups, acute hydrocephalus and chronic hydrocephalus. It is still accepted that acute hydrocephalus is caused by an intraventricular CSF obstruction, in accordance with the conventional view. Chronic hydrocephalus consists of two subtypes, communicating hydrocephalus and chronic obstructive hydrocephalus. The associated malabsorption of CSF is not involved as a causative factor in chronic hydrocephalus. Instead, it is suggested that increased pulse pressure in the brain capillaries maintains the ventricular enlargement in chronic hydrocephalus. Chronic hydrocephalus is due to decreased intracranial compliance, causing restricted arterial pulsations and increased capillary pulsations. The terms "restricted arterial pulsation hydrocephalus" or "increased capillary pulsation hydrocephalus" can be used to stress the hydrodynamic origin of both types of chronic hydrocephalus. The new hydrodynamic theories explain why third ventriculostomy may cure patients with communicating hydrocephalus, a treatment incompatible with the conventional view.