The treatment of seriously mentally ill patients is complicated by variability in individual response to psychotropic drugs. Some patients remain treatment refractory even after two to three therapeutic modalities. Other patients experience adverse events that range from mild discomfort, to poor compliance, to life threatening. Genaissance Pharmaceuticals is actively engaged in a candidate gene-based haplotype (HAP Marker) approach to the pharmacogenetics of drug response and adverse events. In the present article, we review reasons why HAP Markers are more useful than single nucleotide polymorphisms (SNPs) for discovering genetic correlations to clinical response. In addition, we review our approach to HAP Marker discovery, which involves discovering SNPs in the functional regions of genes by sequencing, organizing these SNPs into HAP Markers for an index population of ethnically diverse individuals and calculating population frequencies for these HAP Markers. For clinical correlations, HAP Markers are defined and correlated to clinical data using the in-house DecoGen Informatics System. This approach has clear implications for the discovery of psychiatric disease-associated genes as well as for the development of safer, more efficacious psychiatric drugs.