This review deals with the utilisation of functional near infrared (fNIR) spectroscopy for an in vivo assessment of activation changes in brain tissue, which has broadened the range of non-invasive functional imaging methods within the field of neuroscientific research. Due to its simple and quick applicability as well as the absence of side effects, fNIR spectroscopy is particularly well tolerated by psychiatric patients and can hence markedly contribute to the understanding of the neurobiological basis of psychiatric disorders. The optical, light-based method emits near infrared wavelengths of about 700–1000 nm, which are able to penetrate the scalp and skull, into the head. Because near infrared light is distinctively absorbed by the chromophores oxy-haemoglobin (O₂Hb) and deoxy-haemoglobin (HHb), the measured relative amount of reflected NIR light can indicate regional oxygenation patterns in cortical brain tissue with a depth resolution of, on average, 1.5 cm and a spatial resolution of about 2–3 cm. Validity and reliability of fNIR spectroscopy measurements to assess task-related cognitive activation have been repeatedly confirmed among healthy subjects. Beyond that, the application of fNIR spectroscopy to detect altered cortical oxygenation in psychiatric patients during cognitive tasks has been greatly intensified over the last two decades. In this context, hypo-frontality, a decrease in frontal lobe activity that is associated with a number of clinical symptoms and psychiatric disorders, has been demonstrated in a wide range of fNIR spectroscopy studies with psychiatric patients. Despite its variety of beneficial properties, the most apparent disadvantages of NIR spectroscopy compared to other imaging techniques are its limited spatial as well as depth resolution and its restriction to cortical areas. Although multimodal approaches based on simultaneous application of NIR spectroscopy combined with other imaging techniques initially revealed promising results, further technical development and a broadened implementation of combined measurements are necessary in order to uncover distinct brain activity alterations in different psychiatric disorders. In addition to the need for further technical improvement of the method, broad and longitudinal applications of fNIR spectroscopy measurements in psychiatric research are required in order to identify robust diagnostic markers which are required to establish NIR spectroscopy as a valid inter-individual screening instrument in psychiatry.