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Lurasidone ([3aR,4S,7R,7aS]-2-[(1R,2R)-2-[4-(1,2-benzisothiazol-3-yl)piperazin-1yl-methyl] cyclohexylmethyl]-hexahydro-4,7-methano-2H-isoindole-1,3-dione hydrochloride; Latuda®) is a novel benzisothiazole, second-generation antipsychotic drug developed by Dainippon Sumitomo Pharma Corporation in Japan. Similar to other atypical antipsychotics it has a distinctive pharmacodynamic profile, Areas covered: This review updates reported research findings on the efficacy, safety and tolerability of LRSD for treatment of psychotic and major affective disorders, with meta-analyses. Short-term efficacy of LRSD in schizophrenia is supported by several randomized, controlled trials with daily doses of 40-160 mg, yielding relatively modest symptomatic improvements. Lurasidone has regulatory approval for treatment of undefined duration in schizophrenia. Long-term benefits and effects in schizophrenia, and both short- and long-term use for other psychotic disorders and mania have not been tested. LRSD shows unusual efficacy in acute bipolar depression even without psychotic features. However, trials of adding LRSD to lithium or valproate for bipolar disorder have yielded inconsistent findings. Expert opinion: Available research findings indicate that LRSD is effective and well-tolerated for short-term treatment of schizophrenia, and for acute bipolar depression. It has low risk of inducing weight-gain, metabolic, or cardiac abnormalities, but its risk of akathisia may exceed that of other modern antipsychotics. Needed is adequate long-term testing in schizophrenia and bipolar disorder and testing for other indications, including against alternative treatments.