The main class of atypical antipsychotic drugs (APDs) in current use includes the protypical atypical APD, clozapine, as well as aripiprazole, asenapine, iloperidone, lurasidone, olanzapine, quetiapine, risperidone, and ziprasidone. At clinically effective doses, these agents produce extensive blockade of serotonin (5-HT)2A receptors, direct or indirect stimulation of 5-HT1A receptors, and to a lesser extent, reduction in dopamine (DA) D2 receptor-mediated neurotransmission. This contrasts with typical APDs, for example haloperidol and perphenazine, which are mainly DA D2/D3 receptor antagonists and have weaker, if any, potency as 5-HT2A receptor antagonists. Some, but not all, atypical APDs are also effective 5-HT2C receptor inverse agonists or neutral antagonists, 5-HT6 or 5-HT7 receptor antagonists. This diverse action on 5-HT receptors may contribute to significant differences in efficacy and tolerability among the atypical APDs. There is considerable preclinical and some clinical evidence that effects on 5-HT receptors contribute to the low risk of producing extrapyramidal side effects, which is the defining characteristic of an atypical APD, the lack of elevation in plasma prolactin levels (with risperidone and 9-hydroxyrisperidone being exceptions), antipsychotic action, and ability to improve some domains of cognition in patients with schizophrenia. The serotonergic actions of the atypical APDs, especially 5-HT2A receptor antagonism, are particularly important to the differential effects of typical and atypical APDs to overcome the effects of acute or subchronic administration of N-methyl-d-aspartate (NMDA) receptor antagonists, such as phencyclidine, ketamine, and dizocipline (MK-801). 5-HT1A receptor stimulation and 5-HT6 and 5-HT7 receptor antagonism may contribute to beneficial effects of these agents on cognition. In particular, 5-HT7 receptor antagonism may be the basis for the pro-cognitive effects of the atypical APD, amisulpride, a D2/D3 receptor antagonist, which has no effect on other 5-HT receptor. 5-HT2C receptor antagonism appears to contribute to the weight gain produced by some atypical APDs and may also affect cognition and psychosis via its influence on cortical and limbic dopaminergic activity.