Drug treatment of psychiatric disorders is troubled by severe adverse effects, low compliance and lack of efficacy in about 30% of patients. Pharmacogenetic research in psychiatry aims to elucidate the reasons for treatment failure and adverse reactions. Genetic variations in cytochrome P450 (CYP) enzymes have the potential to directly influence the efficacy and tolerability of commonly used antipsychotic and antidepressant drugs. The activity of psychiatric drugs can also be influenced by genetic alterations affecting the drug target molecule. These include the dopaminergic and serotonergic receptors, neurotransmitter transporters and other receptors and enzymes involved in psychiatric disorders. Association studies investigating the relation between genetic polymorphisms in metabolic enzymes and neurotransmitter receptors on psychiatric treatment outcome provide a step towards the individualization of psychiatric treatment through enabling the selection of the most beneficial drug according to the individual's genetic background.