Tunneling nanotubes (TNTs) are F-actin-based, membrane-enclosed tubular connections between animal cells that transport a variety of cellular cargo. Over the last 15 years since their discovery, TNTs have come to be recognized as key players in normal cell communication and organism development, and are also exploited for the spread of various microbial pathogens and major diseases like cancer and neurodegenerative disorders. TNTs have also been proposed as modalities for disseminating therapeutic drugs between cells. Despite the rapidly expanding and wide-ranging relevance of these structures in both health and disease, there is a glaring dearth of molecular mechanistic knowledge regarding the formation and function of these important but enigmatic structures. A series of fundamental steps are essential for the formation of functional nanotubes. The spatiotemporally controlled and directed modulation of cortical actin dynamics would be required to ensure outward F-actin polymerization. Local plasma membrane deformation to impart negative curvature and membrane addition at a rate commensurate with F-actin polymerization would enable outward TNT elongation. Extrinsic tactic cues, along with cognate intrinsic signaling, would be required to guide and stabilize the elongating TNT towards its intended target, followed by membrane fusion to create a functional TNT. Selected cargoes must be transported between connected cells through the action of molecular motors, before the TNT is retracted or destroyed. This review summarizes the current understanding of the molecular mechanisms regulating these steps, also highlighting areas that deserve future attention.