As a treatment modality for serious mental disorders, partial hospitalization has been proven to have therapeutic and economic advantages. However, it has relatively low utilization and poor third-party reimbursement compared to the more traditional outpatient and inpatient treatments. The authors provide a review and update of the definitions, historical development, models, staffing, and referral patterns of partial hospitalization. They comment on the role of the psychiatrist as a member of the multidisciplinary team in this treatment setting.