Although once considered rare, several more recent investigations have been published describing psychotic features in multiple sclerosis (MS). The association between the two conditions, however, remains unclear. Large-scale hospital-based, epidemiological and case studies have suggested a relationship between psychosis and MS through demonstrating their higher than chance co-occurrence, their temporal relationship, and their association with particular structural abnormalities in the brain (i.e., periventricular white matter and temporal demyelination). The etiology of psychosis in MS has also not been explained adequately. Regional demyelination and the use of corticosteroids have been implicated, yet their mechanisms of action have not been elucidated. The present review addresses what is known at this point in time regarding the occurrence of psychosis in the context of MS, the data regarding possible etiological factors, and the implications of these data and suggestions regarding diagnosis and treatment. Future research should explore the underlying pathophysiology of psychosis and multiple sclerosis to further our understanding of the central nervous system disease process. This research could help determine the features which would guide clinicians in identifying patients at risk of developing psychosis in the context of MS, as well as propose the optimal pharmacological intervention.