Numerous lines of evidence suggest that a disordered circadian system contributes to the etiology and symptomatology of major psychiatric disorders. Sleep disturbances, particularly rapid eye movement (REM) sleep, have been observed in bipolar affective disorder (BPD) and schizophrenia. Therapies aimed at altering the timing and duration of sleep and realigning circadian rhythms, including sleep scheduling, wake extension, light therapy and drug therapies that alter sleep and circadian rhythms appear beneficial for affective disorders. Interventional studies aiming to correct sleep and circadian disturbances in schizophrenia are scarce, although exogenous melatonin has been shown to improve both sleep structure and psychotic symptoms. The study of molecular clock mechanisms in psychiatric disorders is also gaining interest. Genetics studies have found associations with CLOCK, PERIOD1, PERIOD3, and TIMELESS in schizophrenia. Most research on BPD has focused on polymorphisms of CLOCK, but the lithium target GSK-3 may also be significant. New research examining the role of circadian rhythms and clock genes in major mental illness is likely to produce rapid advances in circadian-based therapeutics.