This article reviews governmental guidelines regulating the use of psychotropic drugs in long-term care facilities as established by the Omnibus Budget Reconciliation Act (OBRA) of 1987 and their impact on the use of psychotropic agents in these settings. A major component of these guidelines is to regulate the clinical indications for psychoactive drugs (neuroleptics, benzodiazepines, and sedative hypnotics) in residents of long-term care facilities. Responsibilities of the prescribing physician, facility medical director, and consulting pharmacist--as well as quality assurance procedures-in complying with OBRA regulations are examined. Evidence that OBRA regulations have reduced the use of psychotropic drugs and physical restraints in long-term nursing facilities is reviewed. Implications of the OBRA regulations for the training and clinical practice of psychiatrists and primary care clinicians are discussed as well as recommendations for increasing the availability of mental health services for this patient population via multidisciplinary geropsychiatric consultation-liaison teams.