Background: Irritability is one of the most common reasons for referral to child and adolescent mental health services and is the main characteristic of the new diagnosis of disruptive mood dysregulation disorder (DMDD). However, the recognition and management of irritability presents a major challenge in clinical practice and may be partly responsible for the dramatic increase in antipsychotic prescribing in recent years. Methods: In this review, we provide up-to-date information on the definition and mechanisms underlying irritability, and its assessment in clinical practice. We aim to discuss the latest research on DMDD, and the presence of severe irritability in the context of other disorders, as well as to recommend a treatment algorithm. Results: Severe irritability is associated with aberrant reward processing and bias toward threatening stimuli. Several measures are available to easily assess irritability. The recent diagnosis of DMDD captures children whose main problem is severe irritability and differ from those with bipolar disorder in longitudinal outcomes, family history, and behavioral and neural correlates. Treatment of irritability might depend on the context it appears. Indirect evidence suggests that parent management training (PMT) and cognitive behavioral therapy (CBT) are the most supported psychological treatments for irritability. Conclusions: Irritability, recognized as a mood problem rather than a purely behavioral manifestation, is a common condition for young people. Practitioners should not ignore irritability as it is associated with substantial morbidity and impairment. Although there are no trials with irritability as main outcome, clinicians can apply several existing pharmacological and psychological interventions for its treatment. Also, new promising approaches relying on pathophysiological findings, such as exposure-based cognitive behavioral therapy techniques and interpretation bias training (IBT), are being currently investigated.