Acupuncture fundamentally works by stimulation of a particular nerve group of an affected area that causes the brain to secrete an enhancement of naturally occurring chemicals. The secretion from the brain then causes the promotion of blood flow, significant increase of the body’s natural healing and immunity processes, muscular relaxation, reduction of stress and reduction of intense or chronic pain to the treated area.
Modern research has demonstrated that neurovascular nodes (acupuncture points) contain a high concentration of sensory fibers, fine blood vessels, fine lymphatic vessels, and mast cells. These nodes are distributed along longitudinal pathways of the body where the collateral blood vessels supply the capillaries and fine vessels. The skin is slightly thinner in these areas, with a lower electrical resistance. Acupuncture points also contain more sensory nerves and have more fine vessels with sequestered mast cells than non-nodes. 
The 1997 National Institute of Health (NIH) Consensus on Acupuncture reports, “Studies have demonstrated that acupuncture can cause multiple biological responses, mediated mainly by sensory neurons, to many structures within the central nervous system. This can lead to various physiological systems in the brain, as well as in periphery.”
The NIH Consensus also suggests that acupuncture “may activate the hypothalamus and the pituitary gland, resulting in a broad spectrum of systemic effects. Alterations in the secretion of neurotransmitters and neurohormones, and changes in the regulation of blood flow both centrally and peripherally, have been documented. There is also evidence of alterations in immune functions produced by acupuncture.
Acupuncture has been proven to decrease inflammation, increase blood flow, and activate “feel good” neurotransmitters like serotonin, as well as stimulate endorphin release, which can alleviate pain.
1 Schnorrenberger, Claus C., Morphological foundations of acupuncture: an anatomical nomenclature of acupuncture structures. BMAS Acupuncture in Medicine, 1996. Nov;14(3)89-103.
2,3 National Institute of Health (NIH)- National Institute of Health (NIH) Consensus, Conference on Acupuncture, Program & Abstracts (Bethesda, MD, November 3-5, 1997). Office of Alternative Medicine and Office of Medical Applications of Research, Bethesda, MD.