Attenuation of the phosphatidylinositol (PI) signal transduction pathway as a consequence of inhibition of inositol monophosphatase (IMPase) has been proposed as the mechanism for the efficacy of Li+ in the treatment of bipolar disorder. Nevertheless, Li+ also affects other aspects of PI signal transduction, and it is therefore not clear whether modulation of PI responses by Li+ can be attributed solely to inhibition of IMPase. However, inhibitors of IMPase mimic the effects of Li+ on some aspects of PI cell signalling, thus highlighting the potential of IMPase as a target for the treatment of bipolar disorder. The recent description of the three-dimensional structure of IMPase in conjunction with site-directed mutagenesis and kinetic studies has led to the elucidation of the enzyme mechanism. These structural and mechanistic data should prove useful in the development of novel inhibitors of IMPase that might ultimately prove useful clinically.