Linking the working brain with psychological and psychopathological processes requires an understanding of the complex electro-chemical neuronal activation patterns which underpin mental activities dependent on topographical interactions at systems level. This may be achieved by virtue of the fine temporal resolution of neurophysiological methods which assess summed electrical field potentials. The electroencephalogram (EEG) and event-related potential (ERP) methodologies are no longer simply used to exclude organic pathology. Here, evidence is reviewed showing that cognitive ERPs are related to psychiatric subdiagnoses, risk factors, symptom dimensions and prognosis. In addition there is a renaissance in applications and analysis of EEG rhythms including microstates, coherent oscillations, current source analysis, and composite measures of complexity and connectivity between neurophysiological networks, all of which hold promise for the future. Autonomic findings are also documented. The review covers the schizophrenia spectrum, affective disorders, anxiety disorders and dementia.