Mood‐stabilizing pharmacotherapy has become the mainstay of treatment for bipolar disorder (BD). Despite the increasingly biological conceptualization of illness, psychosocial interventions may also have a role to play in the treatment of manic‐depressive illness. This article aims to provide a comprehensive and critical review of the literature on the use of psychosocial interventions for BD. The general therapeutic processes underlying the effectiveness of these different psychologically based interventions will also be discussed. All papers listed in Medline and Psychological Abstracts published since 1970 on the use of psychosocial interventions for BD were examined and reviewed with regards to efficacy. The evidence suggests that psychosocial interventions combined with mood‐stabilizing medication are associated with superior clinical outcome compared to treatment with mood‐stabilizing medication alone. Seven unique therapeutic mechanisms may underlie the effectiveness of these various psycho‐social interventions, including: closer monitoring of affective symptomatology, earlier environmental modification, enhanced compliance with medication, enhanced social support, improved familial adjustment, regulation of daily routines, and enhancement of coping strategies. Psychosocial interventions have a beneficial effect on clinical outcome in BD. More rigorous controlled research is needed to replicate these initial outcome studies. What also remains to be clarified is whether psychologically based interventions possess unique therapeutic potency independent of their effects on medication compliance. Depression 2:119‐188 (1994/1995). © 1995 Wiley‐Liss, Inc.