Agitation is common in patients with acute schizophrenia and bipolar disorder, and rapid and effective treatment of acute agitation is an important clinical goal. Loxapine is a first-generation antipsychotic medication available in the United States in oral form for more than three decades. In December 2012, an inhaled version of vaporized loxapine was approved by the U.S. FDA for the treatment of agitated adults in the context of schizophrenia or bipolar disorder. In this review, we examine available literature to describe efficacy and safety of inhaled loxapine in healthy patients and in those with pulmonary compromise. Limitations of the current evidence base to predict efficacy in "real world" patients are described, and safeguards necessary for appropriate use in psychiatric acute care settings are discussed.