The human face is of great importance as a stimulus in view of the detailed information it contains--information vital to understand in order to survive in the complex social world. There are different aspects to facial processing, including: affect analysis, recognition of individuality and recognition of familiarity, all of which have been incorporated into the cognitive model of Bruce and Young (1986). The cognitive neuropsychiatric approach has recently been employed in the study of facial processing in schizophrenia. It has become apparent that schizophrenic subjects are impaired in facial processing tasks at all levels, and this may well be related to the misinterpretation of social interactions commonly found in such subjects. This approach has also led to a greater understanding of delusional misidentification, with particular syndromes explained in terms of processing deficits at different levels of the cognitive model above. At an anatomical level, the role of the right hemisphere in facial perception is well-known, with there being some evidence of right hemisphere hypofunction in subjects with schizophrenia and also in delusional misidentification. The review therefore emphasizes the importance of the neuropsychiatric approach for further investigation of facial processing and understanding of symptomatology in schizophrenia and related psychoses.