Corticosteroids, such as prednisone and dexamethasone, are commonly prescribed medications that suppress the immune system and decrease inflammation. Common side effects of long-term treatment with corticosteroids include weight gain, osteoporosis, and diabetes mellitus. This paper reviews the literature on psychiatric and cognitive changes during corticosteroid therapy and potential treatment options. Hypomania and mania are the most common mood changes during acute corticosteroid therapy, although depression has also been reported. However, depression is reported to be more common than mania during long-term treatment with corticosteroids. A decline in declarative and working memory is also reported during corticosteroid therapy. Corticosteroids are associated with changes in the temporal lobe, detected by structural, functional, and spectroscopic imaging. The mood and cognitive symptoms are dose dependent and frequently occur during the first few weeks of therapy. Other risk factors are not well characterized. Controlled trials suggest that lithium and phenytoin can prevent mood symptoms associated with corticosteroids. Lamotrigine and memantine also have been shown to reverse, at least partially, the declarative memory effects of corticosteroids. Uncontrolled trials suggest that antipsychotics, anti-seizure medications, and perhaps some antidepressants can also be useful for normalizing mood changes associated with corticosteroids. Thus, both the symptoms and treatment response are similar to those of bipolar disorder. Moreover, corticosteroid-induced mood and cognitive alterations have been shown to be reversible with dose reduction or discontinuation of treatment.