Evidence is presented here in support of the efficacy of carbamazepine (CBZ) in a variety of different psychiatric conditions. While there is now considerable evidence to support the use of CBZ in the acute treatment of mania and in the prophylaxis of bipolar affective disorder, particularly as a second-line drug, its usefulness in other conditions is less well documented. Overactivity, aggression and poor impulse control appear to improve in a variety of different diagnostic categories, and it may possibly be more appropriately prescribed to control or prevent these symptoms than as a treatment for a particular disease entity. The use of CBZ as an antidepressant is not well proven. Most of the adverse effects reported are due to rapid initial escalation of dosage, which can be avoided, or are reversible such as drug rashes. Severe adverse effects have been reported but are rare. Frequent monitoring of drug plasma concentration is not required. Some reports of synergism with lithium have appeared and combination therapy may be a useful strategy. Drug interactions, the need for clinical monitoring, and the possible pharmacological mode of action of CBZ are also discussed.