Although homocysteine (Hcy) has been widely implicated in the etiology of various physical health impairments, especially cardiovascular diseases, overwhelming evidence indicates that Hcy is also involved in the pathophysiology of schizophrenia and affective disorders. There are several mechanisms linking Hcy to biological underpinnings of psychiatric disorders. It has been found that Hcy interacts with NMDA receptors, initiates oxidative stress, induces apoptosis, triggers mitochondrial dysfunction and leads to vascular damage. Elevated Hcy levels might also contribute to cognitive impairment that is widely observed among patients with affective disorders and schizophrenia. Supplementation of vitamins B and folic acid has been proved to be effective in lowering Hcy levels. There are also studies showing that this supplementation strategy might be beneficial for schizophrenia patients with respect to alleviating negative symptoms. However, there are no studies addressing the influence of add-on therapies with folate and vitamins B on cognitive performance of patients with schizophrenia and affective disorders. In this article, we provide an overview of Hcy metabolism in psychiatric disorders focusing on cognitive correlates and indicating future directions and perspectives.