Research indicates that acupuncture has a number of physiological effects. Because of this, there is not a short, simple answer to the question of how acupuncture works. Rather, from a western point-of-view, acupuncture involves a variety of different mechanisms: .
The following section is a very brief synopsis of some of the modern scientific literature regarding the effects of acupuncture. Most of these are animal studies.
Pain Relief Mechanisms
Diffuse noxious inhibitory controls and gate control mechanisms reduce pain sensation while the stimulus (i.e. the needle) is applied. This occurs with acupuncture point Stomach 36, and probably to any ashi (“ah shir”) or tender point.  You experience this phenomenon when bump your elbow and it hurts less when you rub it.
Polymodal receptors are nociceptors (pain receptors) which respond to mechanical, thermal and chemical stimuli. These release a variety of neuropeptides which serve as local neurotransmitters. Polymodal receptors are thought to be related to the qi sensation many patients feel with properly inserted acupuncture needles.
Dopamine and serotonin, two well known systemic neurotransmitters, are released at acupuncture points including Urinary Bladder 23, Stomach 36, Large Intestine 4, and Du 20. These neurotransmitters affect pleasure and reward systems in the median forebrain bundle. This promotes relaxation and a sense of well being which may contribute to pain relief.
Changes in Autonomic Functions
Local or ashi points in leg muscles have been demonstrated to increased blood flow in muscles which leads to decreased inflammation and promotes healing. The mechanisms for increasing blood flow were not determined. Acupuncture in the lumbar region was shown to increased blood flow to the sciatic nerve and relieve numbness and pain of lower limb.
In a human study, acupuncture points Pericardium 6, Stomach 25, Stomach 21, and Ren 12 have been shown to inhibit acid, enzyme and gastrin secretion, reduce dysrhythmias, and decreases gastric motility. Nausea and vomiting are characterized by irregular GI contractions. These points are traditionally used to treat nausea and vomiting. 
Neurology and Brain Architecture
Recent fMRI studies, have been performed where the brain is imaged during insertion of a needle and stimulation of an acupuncture point. Acupuncture stimulates a signal which is transmitted to a specific part of the brain or spinal column which shows activity in the fMRI image. This activity in the central nervous system then regulates a function or homeostatic process in the body. Examples are given in the following list.
 How Do Acupuncture and Moxibustion Act? – Focusing on Progress in Japanese Acupncture Research, Kwakita K, Shinbara H, Imai K, Fukuda F, Yano T, Journal of Pharmocological Sciences 2002:100:443-459 This is a good review of the Japanese literature.
 Acupuncture and Endorphins, Han J S, Neuroscience Letters. 2004;361:258-261
 Acupuncture Evoked Responses of Subnucleus Reticularis Dorsalis Neurons in the Rat Medula, Bing Z, Villanueva L, Le Bars D.. Neuroscience. 1999;144:693-703
 Polymodal Receptor Hypothesis and the Peripheral Mechanisms of Acupuncture & Moxabustion, Kawakita K. Am J Acupuncture 1993;21:331-338  Effect of Moxibustion on Dopaminergic and Serotonergic systems of Rat Nucleus Accumbens,Fuduka et al, Neurochemical Research, 2005;30:1607-1613
 Changes in Blood Flow and Energy Metabolism in Rat Skeletal Muscle after Ischemia and reperfusion and the Effects of Acupuncture Stimulation on these Changes. Shinbra H., Bulletin Meijii Univ Oriental Medicine, 1998;2:41-54
 Effect of Acupuncture Stimulation to the Low Back on Blood Flow to the Sciatic NerveTrunk in Rabits, YamaguchiD, Matsumoto T., J Japanese Soc Acupuncture Mox. 1997:47:166-171
 Suppressive Effects of Abdominal Acupuncture Stimulation on Electrogastrographic Study in Humans.Imai K et al, Autonomic Nervous System 1996;33:134-139
 Clinical Acupuncture Scientific Basis, Chapter 1 by Pomerance, Chapter 5 by Cho, Springer Publishing, 2000
 Somatotropic Representation of Acupoints in Human Somatosensory Cortex, Nagasaki et al; Magnetic Resonance in Medical Science, Vol 4, No 4, p187-189
 A Manual of Acupuncture; Deadman, Al-Khafaji, and Baker; Journal of Chinese Medicine Publications, 2001