Transcranial direct current stimulation (tDCS) is a promising method for altering the function of neural systems, cognition, and behavior. Evidence is emerging that it can also influence psychiatric symptomatology, including major depression and schizophrenia. However, there are many open questions regarding how the method might have such an effect, and uncertainties surrounding its influence on neural activity, and human cognition and functioning. In the present critical review, we identify key priorities for future research into major depression and schizophrenia, including studies of the mechanism(s) of action of tDCS at the neuronal and systems levels, the establishment of the cognitive impact of tDCS, as well as investigations of the potential clinical efficacy of tDCS. We highlight areas of progress in each of these domains, including data that appear to favor an effect of tDCS on neural oscillations rather than spiking, and findings that tDCS administration to the prefrontal cortex during task training may be an effective way to enhance behavioral performance. Finally, we provide suggestions for further empirical study that will elucidate the impact of tDCS on brain and behavior, and may pave the way for efficacious clinical treatments for psychiatric disorders.