Neuroplasticity plays a role in adaptation to sensory inputs and transient changes in behavior and short lasting memory. Long term changes in neuroplasticity play a role in neuronal development during the growth and formation of long term memories. Stress is a known contributor to psychological and physical disorders. Stressful life events have been related to occurrence of mood disorders in those vulnerable to it. Stress leading to excess release of glucocorticoids results in pyramidal cell loss in hippocampus, a postmortem finding in depression. In cases of schizophrenia, dendritic spine density is found to be lower in areas like Dorso-lateral Pre Frontal Cortex (DLPFC) and there is a reduction of Cortical Dopaminergic (DA) signals. In depression, there is a prominent deficit of explicit memory which is a function of hippocampus and medial temporal lobe. Increased Brain Derived Neurotrophic Factor BDNF levels in ventral tegmental area and Nucleus Accumbans are associated with behaviors like drug seeking and withdrawal state. Antidepressant use reverses the loss of spine density in various brain areas. Chronic antidepressant administration leads to neurogenesis in hippocampus and increase in Brain Derived Neurotrophic Factor (BDNF) expression in hippocampus and Prefrontal Cortex (PFC). Here in this review, an effort is made to better understand the pathophysiology of psychiatric disorders and contribute towards their effective management.