Personalized treatment optimization considers individual clinical, genetic, and environmental factors influencing drug efficacy and tolerability. As evidence accumulates, these approaches may become increasingly integrated into standard psychiatric care, potentially transforming the treatment landscape for mental health disorders. While personalized treatment optimization shows promise in enhancing therapeutic outcomes and minimizing adverse effects, further research is needed to establish its clinical utility and cost-effectiveness across various psychiatric disorders. This review examines the potential utility of personalized treatment optimization in psychiatry, addressing the challenge of suboptimal effectiveness and variable patient responses to psychiatric medications. It explores how therapeutic drug monitoring, pharmacogenomics, and biomarker testing can be used to individualize and optimize pharmacotherapy for mental disorders such as depression, bipolar disorder, and schizophrenia.