Recent data suggest that the presence of psychotic symptoms in patients suffering from posttraumatic stress disorder (PTSD) may represent an underrecognized and unique subtype of PTSD. Among combat veterans with PTSD, 30% to 40% report auditory or visual hallucinations and/or delusions. The presence of psychotic symptoms in PTSD is associated with a more severe level of psychopathology, similar to that of chronic schizophrenia. In this review, the differential diagnosis of psychotic symptoms in PTSD is discussed, including possible comorbid schizophrenia, psychotic depression, substance-induced psychosis, and personality disorder. A recent biologic study supporting the existence of a unique subtype of PTSD with psychotic features is also addressed, as are the similarities between PTSD with psychotic features and psychotic depression disorder. Finally, data on the treatment implications of psychotic symptoms in PTSD are presented. The intriguing recent findings on psychotic symptoms in PTSD need further investigation in noncombat-related PTSD populations before findings can be generalized to all individuals with PTSD.