Forty years after the initial discovery of neurogenesis in the postnatal brain of the rat, convincing evidence has been accrued that functional neurons are generated throughout the entire lifespan, particularly in the dentate gyrus (DG) and the subventricular zone (SVZ). This phenomenon has been termed adult neurogenesis (AN) and while it was detected in all examined mammalian species including humans, the physiological role of this process remains unknown. Although a plethora of animal studies indicate an involvement of AN in the pathophysiology of depression, this view has recently kindled considerable controversy. Pertinent studies in humans failed to confirm a role of reduced hippocampal neural stem cell proliferation (NSP) in depression but suggest a contribution to the pathophysiology of schizophrenia. The functional relevance of disturbed AN may encompass erroneous temporal encoding of new memory traces, thereby contributing to cognitive deficits observed in schizophrenia. This AN-hypothesis of schizophrenia is supported by neuroimaging, as well as by several genetically modified rodent models, e.g. reelin and NPAS3 knockout mice. Furthermore, several genes impacting on AN, including NPAS3, were also found to be associated with schizophrenia by case-control studies. In conclusion, several lines of evidence suggest that reduced AN may contribute to the etiopathogenesis of schizophrenic disorders, whereas it does not seem to be a critical risk factor for affective disorders.