The Middle Ages represented a rather bleak period in terms of humanity in general, but circumstances were particularly difficult for individuals with psychotic illness. During the medieval era, patients with psychosis were imprisoned in dungeons alongside criminals or locked up in lunatic asylums. Treatment mainly involved physical punishments and torture. Men and women with psychosis and other mental health disorders were often accused and tried for practicing witchcraft.

However, two exceptions to this lack of progress in exploring the human mind, were Christian philosopher Thomas Aquinas and theologian and scientist Albertus Magnus. They developed the concept of psychopathology, which proposed that mental illness or insanity arose from physical ailment as it was not believed possible that the "soul" could become ill.

As Western society started to grow after the middle ages and thinking became more revolutionary and humanitarian, the situation started to improve for mentally ill individuals. During the French Revolution, a man called Philippe Pinel started to physically free mental patients by removing their manacles and chains. In addition, a scientific interest in mental health began to emerge and replace the religious approach.

The term psychosis was first introduced by Karl Friedrich Constatt who used it as an abbreviation of "psychic neurosis," when neurosis then referred to any nervous system disease. Constatt was therefore referring to a symptom of brain disease. A man called Ernst von Feuchtersleben was also widely acknowledged for first using the term in 1845, in place of terms such as insanity and mania.

The word psychosis originates from the Greek words for "psyche" meaning the soul and "osis" meaning abnormal condition. The term psychosis was also used to distinguish disorders of the mind from "neurosis," which was thought to affect the nervous system. Psychosis therefore became the new term for madness, and as such, much debate began about how many forms of this new disease existed.

In the late 19th Century, a German psychiatrist called Emil Kraepelin announced a new, "clinical" approach to mental illness as opposed to a "symptomatic" one. He reclassified all of the mental illnesses described until then according to shared patterns of symptoms or syndromes, rather than grouping them based on the major symptoms.

Kraepelin is often considered the father of modern psychiatric classification and is particularly noted for dividing psychosis into two distinct forms: manic depressive insanity and dementia praecox. The former included a whole spectrum of mood disorders ranging from unipolar clinical depression through to bipolar disorder and other mood problems. Dementia praecox referred to mental illness unrelated to mood disorders and characterized by psychotic deterioration and cognitive disintegration.