The acupuncturist uses needles to regulate qi at points along certain meridians. The needle acts as a conductor for the qi. By manipulating the body's micro-electric current, we can influence the meridian points and thereby regulate the imbalances of yin and yang in your body. When yin and yang are in balance, your body has a greater ability to heal.
From the point of Western Medicine, the most common explanation is that the needles insertion causes endorphins
(1) to be released. These opiates acts as natural fever reducer and pain killer. When you insert a needle into the skin there are three major physiological mechanisms:
1. In reaction to the foreign object penetrating the skin an immune-reaction starts.
2. The stimulation of a needle causes the nerves and muscles to send messages to the spinal cord and brain.
3. The needle also causes blood circulation in the deep layers of the the muscles and tissues, stimulating the bodies self-healing mechanism.
Recommended Reading:
(1)
http://en.wikipedia.org/wiki/Endorphin