The significant prevalence of substance use disorders among patients with psychiatric illnesses has attracted increasing interest. One large epidemiologic study indicates that, of all Axis I disorders, bipolar disorder is the most likely to co-occur with alcohol or drug abuse. Evidence is emerging that shows that bipolar patients who also abuse drugs or alcohol have an earlier onset and worse course of illness compared with those who do not. They are more likely to experience irritable and dysphoric mood states, increased treatment resistance, and a greater need for hospitalization. Caution about diagnosing bipolar disorder in the presence of substance abuse is advised because of overlapping symptomatology. A rationale for the pharmacologic approach to treatment is explored. Data from several studies indicate that the presence of a substance use disorder may be a predictor of poor response to lithium. While it is possible that the anticonvulsants divalproex sodium and carbamazepine may be more useful in this population, a direct comparison of lithium with the anticonvulsants in a substance-abusing population of individuals with bipolar disorder has not yet been performed. Further investigation of diagnostic and treatment issues in this important population of patients with bipolar disorder is needed.