Objective: Telepsychiatry in the form of videoconferencing brings enormous opportunities for clinical care, education, research, and administration. Focusing on videoconferencing, we reviewed the telepsychiatry literature and compared telepsychiatry with services delivered in person or through other technologies. Methods: We conducted a comprehensive review of telepsychiatry literature from January 1, 1965, to July 31, 2003, using the terms telepsychiatry, telemedicine, videoconferencing, effectiveness, efficacy, access, outcomes, satisfaction, quality of care, education, empowerment, and costs. We selected studies for review if they discussed videoconferencing for clinical and educational applications. Results: Telepsychiatry is successfully used for various clinical services and educational initiatives. Telepsychiatry is feasible, increases access to care, enables specialty consultation, yields positive outcomes, allows reliable evaluation, has few negative aspects in terms of communication, generally satisfies patients and providers, facilitates education, and empowers parties using it. Data are limited with regard to clinical outcomes and cost-effectiveness. Conclusions: Telepsychiatry is effective. More short- and long-term quantitative and qualitative research is warranted on clinical outcomes, predictors of satisfaction, costs, and educational outcomes.