The infectious etiology of psychiatric illnesses has remained an unexplored area till recently. During the past two decades, numerous studies from multiple angles have tried to link chronic toxoplasmosis with schizophrenia and bipolar disorders, among others. Most of the evidence has come from serological studies in the patient population, but other facets have also been explored. This review examines the various areas from which a causal link has been deduced and includes: (a) serological studies, (b) effect of maternal toxoplasmosis on children, (c) neurotransmitter studies, (d) parasite localization in the brain, (e) role of cytokines, and (f) psychotherapy and its effect on Toxoplasma. However, multiple factors may play a role in the etiopathogenesis of psychiatric illnesses, and chronic Toxoplasma infection may be considered an important risk factor for the genesis and symptomatology of schizophrenia and bipolar disorders.