Heterogeneity of clinical response to antidepressant and mood-stabilizing drugs and susceptibility to adverse effects are major clinical problems. It is reasonable to suggest a genetic contribution to these inter-individual differences. Thus, pharmacogenetic approaches could provide the clinician with tools to individualize pharmacotherapy. In this paper, published reports that address the genetic basis of response to antidepressant drugs and mood-stabilizing drugs are selectively reviewed. There is substantial support for the assumption that genetic factors play a role in response to lithium and a degree of support for a role of such factors in response to antidepressants. Based on a Medline search and access to papers accepted but not yet published, studies on the role of specific candidate genes are comprehensively evaluated. A number of studies from different groups point to a role for polymorphism of the serotonin transporter gene in the therapeutic response to specific serotonin reuptake inhibitors. There are reports of other candidate genes, particularly in the serotonergic system, but these have still to be replicated. There is little evidence thus far that points to a role for specific candidate genes in response to mood-stabilizing drugs. Future research directions including the selection of relevant candidate genes, pivotal issues in the design of studies and high throughput methods of analysis are discussed in the light of the findings. Although pharmacogenetic approaches have great potential in the treatment of major depression and bipolar disorder, substantial further research is needed. Careful attention needs to be paid to research design issues and potential confounding factors such as population stratification. High throughput, genome-wide approaches could greatly accelerate the acquisition of relevant data but their success is dependent on the availability of appropriate clinical samples.