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Objective: The authors critically examine the evidence supporting the hypothesis that lithium's therapeutic effects in bipolar affective disorder are mediated by alterations in the expression of specific genes in critical neuronal circuits. Method: Using the heuristic 'initiation and adaptation paradigm,' the authors appraise the biological effects and underlying molecular and cellular mechanisms of lithium's action. The evidence is critically reviewed, with special attention to the reductive and integrative approaches necessary for identifying lithium's clinically relevant cellular and molecular targets. Results: Lithium's acute effects are mediated through inhibition of specific enzymes involved in two distinct but interacting signaling pathways - the protein kinase C and glycogen synthase kinase 3beta signaling cascades - that converge at the level of gene transcriptional regulation. The expression of different genes, including transcription factors, is markedly altered by chronic lithium administration. Chronic lithium treatment also robustly increases the expression of the neuroprotective protein Bcl-2, raising the intriguing possibility that some of lithium's effects are mediated through underappreciated neurotrophic/neuroprotective effects. The importance of lithium's effect on circadian rhythms and the related methodological problems in validating the role of specific genes in lithium's therapeutic effects are discussed. Conclusions: Despite the plethora of lithium effects at the genomic level, direct evidence that the genes identified thus far are responsible for phenotypic changes associated with chronic lithium treatment is still lacking. The combination of sensitive molecular technologies, appropriately designed paradigms, better behavioral analysis, and a chronobiologic approach seems necessary for the future identification of one or more clinically relevant lithium-target genes.