Response to drugs can vary between individuals and between different ethnic populations. The biological (age, gender, disease and genetics), cultural and environmental factors which contribute to these variations are considered in this review. The most important aspect is the genetic variability between individuals in their ability to metabolize drugs due to expression of 'polymorphic' enzymes. Polymorphism enables division of individuals within a given population into at least two groups, poor metabolisers (PMs) and extensive metabolisers (EMs) of certain drugs. The two most extensively studied genetic polymorphisms are those involving cytochrome P450 2D6 (CYP2D6) and CYP2C19. CYP2D6 metabolizes a number of antidepressants, antipsychotics, beta-adrenoceptor blockers, and antiarrhythmic drugs. About 7% of Caucasians and 1% of Asians are PMs of CYP2D6 substrates. CYP2C19 enzyme participates in the metabolism of omeprazole, propranolol and psychotropic drugs such as hexobarbital, diazepam, citalopram, imipramine, clomipramine and amitriptyline. The incidence of PMs of CYP2C19 substrates is much higher in Asians (15-30%) than in Caucasians (3-6%). Variations in metabolism of psychotropic drugs result in variations in their pharmacokinetic parameters. This may lead to clinically significant intra- and inter-ethnic differences in pharmacological responses. Such variations are discussed in this review. Differential receptor-mediated response may play a role in ethnic differences in responses to antipsychotics and tricyclic antidepressants, but such pharmacodynamic factors remain to be systematically investigated. The results of studies of ethnic differences in response to psycho-pharmacotherapy appear to be discrepant, most probably due to limitations of study design, small sample size, inadequately defined study sample, and lack of control of confounding factors. The clinical value of understanding pharmacogenetics is in its use to optimize therapeutic efficacy, to prevent toxicity of those drugs whose metabolism is catalysed by polymorphic isoenzymes, and to contribute to the rational design of new drugs. Finally, applications and impact of pharmacogenetics in the field of psychopharmacotherapy are discussed.