The function of a neutral wire is to serve as the return path for the 120 volts of alternating current supplied by a hot wire. The neutral wire connects to an earth ground.
In the United States, standard electrical wiring is usually set up using cables sheathed in plastic. Inside the cable are three conductors. One is a bare copper wire, and the other two are coated in white plastic insulation and black plastic insulation. The black conductor is called the hot wire, the white one is the neutral wire, and the bare copper conductor is the ground wire.
The neutral wire and the hot wire are part of the live circuit. The ground wire connects to any metal and serves as a safety feature to eliminate shocks if the hot or neutral wires touch any metal.