Mental disorders are highly complex and multifactorial in origin, comprising an elaborate interplay of genetic and environmental factors. Epigenetic mechanisms such as DNA modifications (e.g. CpG methylation), histone modifications (e.g. acetylation) and microRNAs function as a translator between genes and the environment. Indeed, environmental influences such as exposure to stress shape epigenetic patterns, and lifetime experiences continue to alter the function of the genome throughout the lifespan. Here, we summarize the recently burgeoning body of research regarding the involvement of aberrant epigenetic signatures in mediating an increased vulnerability to a wide range of mental disorders. We review the current knowledge of epigenetic changes to constitute useful markers predicting the clinical response to psychotherapeutic interventions, and of psychotherapy to alter – and potentially reverse – epigenetic risk patterns. Given first evidence pointing to a transgenerational transmission of epigenetic information, epigenetic alterations arising from successful psychotherapy might be transferred to future generations and thus contribute to the prevention of mental disorders. Findings are integrated into a multi-level framework highlighting challenges pertaining to the mechanisms of action and clinical implications of epigenetic research. Promising future directions regarding the prediction, prevention, and personalized treatment of mental disorders in line with a ‘precision medicine’ approach are discussed.Copyright © 2020 The Author(s). Published by Elsevier Ltd.. All rights reserved.