Psychiatric disorders affect a substantial proportion of the population worldwide. This high prevalence, combined with the chronicity of the disorders and the major social and economic impacts, creates a significant burden. As a result, an important priority is the development of novel and effective interventional strategies for reducing incidence rates and improving outcomes. This review explores the progress that has been made to date in establishing valid animal models of psychiatric disorders, while beginning to unravel the complex factors that may be contributing to the limitations of current methodological approaches. We propose some approaches for optimizing the validity of animal models and developing effective interventions. We use schizophrenia and autism spectrum disorders as examples of disorders for which development of valid preclinical models, and fully effective therapeutics, have proven particularly challenging. However, the conclusions have relevance to various other psychiatric conditions, including depression, anxiety and bipolar disorders. We address the key aspects of construct, face and predictive validity in animal models, incorporating genetic and environmental factors. Our understanding of psychiatric disorders is accelerating exponentially, revealing extraordinary levels of genetic complexity, heterogeneity and pleiotropy. The environmental factors contributing to individual, and multiple, disorders also exhibit breathtaking complexity, requiring systematic analysis to experimentally explore the environmental mediators and modulators which constitute the 'envirome' of each psychiatric disorder. Ultimately, genetic and environmental factors need to be integrated via animal models incorporating the spatiotemporal complexity of gene-environment interactions and experience-dependent plasticity, thus better recapitulating the dynamic nature of brain development, function and dysfunction.