How does control unit of a computer works?

The control unit is the part of the CPU that directs all other parts. It does not process data itself.

It first fetches the instruction from memory using the address in the program counter, and places it in the instruction register. It then decodes the opcode to learn what is to be done. Using the decoded instruction and the clock timing signals, it produces control signals. These open the right data paths, select the ALU function, and give read or write commands to memory and I/O. It also watches status flags and interrupt requests. It may be hardwired (logic gates) or microprogrammed (control memory).