Bipolar disorder is a chronic, severe condition commonly causing substantial mortality and psychosocial morbidity. Challenges in recognition can delay the institution of appropriate management, whereas misdiagnosis may initiate pharmacologic interventions that adversely affect the condition's course. Pharmacotherapy remains the foundation of treatment. In addition to efficacy, tolerability is an important consideration in medication choice, particularly for long-term maintenance because of its impact on adherence. Mood stabilizers are the classic treatments for bipolar disorder. Newer agents such as atypical antipsychotics may offer efficacy and/or tolerability advantages compared with other medications. The role of antidepressants in bipolar disorder remains controversial. Growing evidence indicates that adjunctive psychosocial interventions improve long-term functioning; consequently, psychologists are becoming increasingly involved in the long-term care of patients with bipolar disorder. This review seeks to update psychologists and related healthcare professionals on recent advances and the current limitations in the diagnosis and treatment of bipolar disorder. © 2006 Wiley Periodicals, Inc. J Clin Psychol 63: 73–92, 2007.