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Background: Transcranial alternating current stimulation (TACS) is a non-invasive method of brain stimulation that is hypothesised to alter cortical excitability and brain electrical activity, modulating functional connectivity within the brain. Several trials have demonstrated its potential in treating psychiatric disorders such as depression and schizophrenia. Objectives: To study the efficacy of TACS in ameliorating symptoms of depression and schizophrenia in patients and its effects on cognition in patients and healthy subjects compared to sham stimulation. Design: Systematic review with meta-analysis. Data Sources and Methods: This PROSPERO-registered systematic review (CRD42022331149) is reported according to Preferred Reporting Items for Systematic Reviews and Meta-Analyses (PRISMA) guidelines. PubMed, EMBASE, CENTRAL and PsycINFO were searched from inception to March 2022. Only randomised-controlled trials were included. Results: A total of 12 randomised-controlled trials are reviewed for meta-analysis, with three randomised-controlled trials reporting only effects on cognition in psychiatric and cognitively impaired patients, three trials on cognition in healthy subjects, one trial on cognition in both patients and healthy subjects, one trial on only depression, two on both cognition and depression in patients and two on schizophrenia symptoms. No studies were at significant risk of bias. For cognition, TACS showed significant improvement [positive standardised mean differences (SMD) denoting improvement] over sham stimulation in those with psychiatric disorders with an SMD of 0.60 (95% confidence interval [CI]: 0.14, 1.06). Similarly, among patients with depression, an SMD of 1.14 (95% CI: 0.10, 2.18) was found significantly favouring TACS over sham stimulation. Two studies assessed the effect of TACS on schizophrenia symptoms with mixed results. Conclusion: TACS has shown promise in ameliorating symptoms of both schizophrenia and depression in patients. TACS also improves cognition in both patients and healthy subjects. However, these findings are limited by the sample size of included studies, and future studies may be required to better our understanding of the potential of TACS. Registration: PROSPERO (CRD42022331149)