The technique of targeted inactivation of individual genes in mice has undoubtedly revolutionized biomedicine. Applications for gene knockout mice in neuropsychopharmacology are manifold: Determination of targets for established treatments is eased, while development of novel drugs is facilitated for a given target. This review discusses advantages and limitations of gene knockout strategies and, in particular, their relevance for the development of novel diagnostic and therapeutic approaches in psychiatric disorders. In addition to the classical targeted disruption of one or several genes simultanously, it specifically emphasizes those novel techniques that allow the inactivation of a gene with spatio-temporal selectivity.