Due to the increase of chronic diseases within the last decades the need and demand for psychosocial treatment in medicine has been realized. This review focuses on the psychosocial aspects of chronic diseases and discusses selected topics of medical and rehabilitation psychology. Recent developments in quantitative and qualitative methods have allowed the systematic analysis of psychosocial distress and coping with chronic disease as well as the consequences on social relationships. The need for psychosocial treatment in acute care and rehabilitation can be diagnosed by differential assessment tools for coping and psychiatric morbidity. Specific approaches of psychology and psychotherapy for patients with somatic diseases have been developed and may be regarded as an integrative part of medical treatment in acute care and rehabilitation. In rehabilitation, the traditional individualistic view of psychotherapy has been broadened towards vocational integration and participation in social activities as outcome criteria. Evaluation research as well as the rehabilitation sciences have provided empirical data on psychosocial treatment of chronically ill patients. Under increasing financial restrictions and problems of the health care systems there is a need for quality assurance and the proof of scientific evidence to guarantee psychosocial treatment as an integrated part of medical care in the future.