This review is aimed at exploring the usefulness of measuring event-related potential (ERP) in cognitive tests and discusses several applications of the ERP technique. Analysis of ERP components is one of the most informative dynamic methods of investigation and monitoring of information processing stages in the human brain. Amplitude and latency of ERP components at specified topographies reflect early sensory perception processes and higher level processing including attention, cortical inhibition, memory update, error monitoring, and other cognitive activities. ERPs provide a method of studying cognitive processes in typical subjects, as well as a sensitive instrument to assess differences in individuals with neuro-and psychopathologies. Despite significant advances in functional neuroimaging, the ERP measure still represents an important tool for brain research in psychiatry, as many psychiatric diseases correlate with certain altered patterns of ERPs. Such ERP alterations can serve as valid biological markers for functional diagnostic or for better understanding of the cognitive functions which are disturbed in psychiatric disorders. Application of ERPs in psychiatric treatment research is an approach aimed at validation of specific ERP measures as sensitive functional outcomes of experimental neuromodulation interventions such as rTMS and neurofeedback. Also discussed are additional aspects of ERP usefulness in psychiatry research and treatment.