This article reviews recent advances in the domain of psychiatry and religion that highlight the double-edged capacity of religion to enhance or damage health and well-being, particularly among psychiatric patients. A large body of research challenges stereotyped views of religion as merely a defense or passive way of coping, and indicates that many people look to religion as a vital resource which serves a variety of adaptive functions, such as self-regulation, attachment, emotional comfort, meaning, and spirituality. There is, however, a darker side to religious life. Researchers and theorists have identified and begun to study problematic aspects of religiousness, including religiously-based violence and religious struggles within oneself, with others, and with the divine. Religious problems can be understood as a by-product of psychiatric illness (secondary), a source of psychiatric illness (primary), or both (complex). This growing body of knowledge underscores the need to attend more fully to the potentially constructive and destructive roles of religion in psychiatric diagnosis, assessment, and treatment. In fact, initial evaluative studies of the impact of spiritually integrated treatments among a range of psychiatric populations have shown promising results. The article concludes with a set of recommendations to advance future research and practice, including the need for additional psychiatric studies of people from diverse cultures and religious traditions.