Clozapine, iloperidone, quetiapine, olanzapine, risperidone and ziprasidone represent the new generation of antipsychotic drugs, successors to the typical antipsychotic drugs such as chlorpromazine and haloperidol. The first group of agents are usually referred to as atypical antispychotics because they produce significantly fewer extrapyramidal symptoms than do the typical neuroleptics at clinically equivalent doses. These drugs also show advantages in treating positive symptoms, especially in patients whose positive symptoms fail to respond to the typical antipsychotic drugs. They also have advantages for treating negative symptoms, cognitive dysfunction and mood stabilization. There are variations to the extent to which the atypical antipsychotics show these advantages with regard to efficacy and side effects. The mechanism of action of these drugs is a matter of keen interest. We review here the evidence that some, or all, of these advantages are related to their actions at serotonin and dopamine receptors.