Telepsychiatry, in the form of videoconferencing and other modalities, brings enormous opportunities for clinical care, education, research and administration to the field of medicine. A comprehensive review of the literature related to telepsychiatry - specifically videoconferencing - was conducted using the MEDLINE, Embase, Science Citation Index, Social Sciences Citation Index and Telemedicine Information Exchange databases (1965 to June 2001). The keywords used were telepsychiatry, telemedicine, videoconferencing, Internet, primary care, education, personal digital assistant and handheld computers. Studies were selected for review if they discussed videoconferencing for patient care, satisfaction, outcomes, education and costs, and provided models of facilitating clinical service delivery. Literature on other technologies was also assessed and compared with telepsychiatry to provide an idea of future applications of technology. Published data indicate that telepsychiatry is successfully used for a variety of clinical services and educational initiatives. Telepsychiatry is generally feasible, offers a number of models of care and consultation, in general satisfies patients and providers, and has positive and negative effects on interpersonal behaviour. More quantitative and qualitative research is warranted with regard to the use of telepsychiatry in clinical and educational programmes and interventions.