Abstract Background Diagnosis of functional movement disorders and specifically functional tremor (FT) (representing 50% of them) remains demanding. Additionally, due to heterogeneity of the disorders, structured concepts and guidelines for diagnosis and therapy are difficult to establish. Ascertaining the state of knowledge to derive instructions for operating procedures is the aim of this review. Main text Based on a standardized systematic literature research using the term “psychogenic tremor” in the MEDLINE database dating back ten years, 76 studies were evaluated. Conventional features of FT are variability of frequency and amplitude. Further, response to distraction by motor and cognitive tasks is a key diagnostic feature in differentiation between organic and functional origin. A variety of electrophysiological tests have been evaluated including surface electromyography and accelerometry to establish laboratory-supported criteria for diagnosing tremor. Also, finger tapping tests have been used to identify FT, showing positive potential as supplementary evidence. Imaging studies in general are mostly underpowered and imaging cannot be used on an individual basis. Therapeutic studies in FT often have a diagnostic component. Cognitive behavioral therapy should be the preferred psychological treatment independent of additional psychiatric symptoms. Other psychotherapeutic methods show lack of evidence concerning FT. Relaxation techniques and physiotherapy are an important additional feature, especially in children and adolescents. In regard to drug therapy, randomized and blinded trials are not available. A significant decrease in rating scales could be detected after active, not sham repetitive transcranial magnetic stimulation with a long-lasting effect. Also root magnetic stimulation seems to be effective. The clinical feature of tremor entrainment in FT can be used in combination with biofeedback as so-called tremor retrainment, using self-modulation of frequency and severity, to bring the movements under volitional control. Conclusion Diagnosis and treatment of FT is challenging and should include a combination of intensive clinical examination and targeted addition of standardized testing, especially electrophysiological methods. Often therapeutic effects have a diagnostic component. A multimodal strategy, considering psychological factors as a potential origin as well as maintaining effects seems to be most effective.