Biomarkers are biological measures that are indicative of a specific disorder, its severity or response to treatment. They are widely used in many areas of medicine, but biomarker development for brain-based disorders lags behind. Using examples from the field of psychiatry, this article reviews the concepts of biomarkers, challenges to their development and the recent progress along those lines. In addition to discussing historical biomarker candidates such as cortisol or catecholamine levels, we include progress from recent genetic, epigenetic, proteomic, neuroimaging and EEG studies. Successful identification of biomarkers will advance the field of psychiatry towards the goal of biological tests for diagnosis, symptom management and treatment response.