Clinical reasoning is a crucial skill and defining characteristic of the medical profession, which relates to intricate cognitive and decision-making processes that are needed to solve real-world clinical problems. However, much of our current competency-based medical education systems have focused on imparting swathes of content knowledge and skills to our medical trainees, without an adequate emphasis on strengthening the cognitive schema and psychological processes that govern actual decision-making in clinical environments. Nonetheless, flawed clinical reasoning has serious repercussions on patient care, as it is associated with diagnostic errors, inappropriate investigations, and incongruent or suboptimal management plans that can result in significant morbidity and even mortality. In this article, we discuss the psychological constructs of clinical reasoning in the form of cognitive ‘thought processing’ models and real-world contextual or emotional influences on clinical decision-making. In addition, we propose practical strategies, including pedagogical development of a personal cognitive schema, mitigating strategies to combat cognitive bias and flawed reasoning, and emotional regulation and self-care techniques, which can be adopted in medical training to optimize physicians’ clinical reasoning in real-world practice that effectively translates learnt knowledge and skill sets into good decisions and outcomes.