Two decades ago, the introduction of functional near-infrared spectroscopy (fNIRS) into the field of neuroscience created new opportunities for investigating neural processes within the human cerebral cortex. Since then, fNIRS has been increasingly used to conduct functional activation studies in different neuropsychiatric disorders, most prominently schizophrenic illnesses, affective disorders and developmental syndromes, such as attention-deficit/hyperactivity disorder as well as normal and pathological aging. This review article provides a comprehensive overview of state of the art fNIRS research in psychiatry covering a wide range of applications, including studies on the phenomenological characterization of psychiatric disorders, descriptions of life-time developmental aspects, treatment effects, and genetic influences on neuroimaging data. Finally, methodological shortcomings as well as current research perspectives and promising future applications of fNIRS in psychiatry are discussed. We conclude that fNIRS is a valid addition to the range of neuroscientific methods available to assess neural mechanisms underlying neuropsychiatric disorders. Future research should particularly focus on expanding the presently used activation paradigms and cortical regions of interest, while additionally fostering technical and methodological advances particularly concerning the identification and removal of extracranial influences on fNIRS data as well as systematic artifact correction. Eventually, fNIRS might be a useful tool in practical psychiatric settings involving both diagnostics and the complementary treatment of psychological disorders using, for example, neurofeedback applications. Copyright © 2013 Elsevier Inc. All rights reserved.