This article provides an overview of the issues involved in developing, using, and evaluating specific medication guidelines for patients with psychiatric disorders. The potential advantages and disadvantages, as well as the essential elements in the structure of algorithms, are illustrated by experience to date with the Texas Medication Algorithm Project, a public-academic collaboration. Phase 1 entailed assembling research findings on the efficacy of medications for schizophrenic, bipolar, and major depressive disorders. This knowledge was evaluated for its quality and relevance, integrated with expert clinical judgment as well as input by practicing clinicians, family advocates, and patients. Phase 1 (the design and development of the algorithms) was followed by a feasibility test (Phase 2). Phase 3 is an ongoing evaluation comparing the clinical and economic effects of using specific medication guidelines (algorithms) versus treatment as usual in public sector patients with severe and persistent mental illnesses.