The De anima of Aristotle is considered the first monument of psychology as such, centered around the belief that the heart was the basis for mental activity. The foundations of modern psychology were laid by 17th-century philosopher Thomas Hobbes, who argued that scientific causes could be established for every sort of phenomenon through deductive reasoning. The mind-body theories of Rene Descartes, Baruch Spinoza, and G. W. Leibniz were equally crucial in the development of modern psychology, where the human mind's relation to the body and its actions have been significant topics of debate.

In England the empirical method employed in modern psychological study originated in the work of John Locke, George Berkeley, Thomas Reid, and David Hume. David Hartley, James Mill, John Stuart Mill, and Alexander Bain stressed the relation of physiology to psychology, an important development in the scientific techniques of modern psychology. Important contributions were made in the physiological understanding of human psychology by French philosopher Condillac, F. J. Gall, the German founder of phrenology, and French surgeon Paul Broca, who localized speech centers in the brain.

In the 19th cent., the laboratory work of Ernst Heinrich Weber, Gustave Fechner, Wilhelm Wundt, Hermann von Helmholtz, and Edward Titchener helped to establish psychology as a scientific discipline—both through the use of the scientific method of research, and in the belief that mental processes could be quantified with careful research techniques. The principle of evolution, stemming from Charles Darwin's theory of natural selection, gave rise to what became known as dynamic psychology. The new approach, presented by American psychologist William James in his Principles of Psychology (1890), looked at consciousness as an evolutionary process.

Out of the new orientation in psychology grew the clinical experiments in hysteria and hypnotism carried on by J. M. Charcot and Pierre Janet in France. Sigmund Freud, in his influential theory of the unconscious, gave a new direction to psychology and laid the groundwork for the psychoanalytic model. Freudian theory took psychology into such fields as education, anthropology, and medicine, and Freudian research methods became the foundations of clinical psychology.

The behaviorism of American psychologist John B. Watson was highly influential in the 1920s and 30s, with its suggestion that psychology should concern itself solely with sensory stimuli and behavioral reaction. Behaviorism has been important in modern psychology, particularly through the work of B. F. Skinner since the 1930s.

Equally important was the development of Gestalt psychology by German psychologists Kurt Koffka, Wolfgang Köhler, and Max Wertheimer. Gestalt theory contended that the task of psychology was to study human thought and behavior as a whole, rather than breaking it down into isolated instances of stimulus and response.

Another influential school of psychology was developed in the 1950s and 60s by Abraham Maslow and Carl Rogers. Their humanistic theory asserts that people make rational, conscious decisions regarding their lives, and optimistically suggests that individuals tend to reach toward their greatest potential.

Modern psychology is divided into several subdisciplines, each based on differing models of behavior and mental processes. Psychologists work in a number of different settings, including universities and colleges, primary and secondary schools, government agencies, private industry, hospitals, clinics, and private practices. Recent years have seen a rise in the significance of applied psychology—as can be seen from the areas contemporary psychologists concern themselves with—with an attendant decline in the importance of psychology in academia. In the United States, clinical psychology has become a significant focus of the discipline, largely separate from psychological research. Clinical psychologists are responsible for the diagnosis and treatment of various psychological problems.

Biological models of behavior have become increasingly prominent in psychological theory, particularly with the development of various tools—such as the positron emission tomography (PET) scan—for mapping the brain. The field of neuropsychology, which studies the brain and the connected nervous system, has been an outgrowth of this contemporary focus on biological explanations of human thought and behavior. Cognitive models, derived from the Gestalt school of psychology, focus on the various thinking processes which mediate between stimuli and responses.

Educational psychology, derived from the 18th and 19th cent. educational reforms of Friedrich W. Froebel, Johann Pestalozzi, and their follower Johann Herbart, was later expanded by G. Stanley Hall and by E. L. Thorndike. It is concerned with the development of improved methods of teaching and learning.

Social psychology, developed by British psychologists William McDougall and Havelock Ellis, studies the effects of various social environments on the individual. Some other branches of the field include developmental psychology, which studies the changes in thought and behavior through the course of life; experimental psychology, which is the laboratory research involved in the understanding of the mind; and personality psychology, which deals specifically with individual personality and the processes by which it is formed.

In recent years a number of new fields of psychology have emerged. Industrial/organizational psychology, emerging from social psychology, focuses on the workplace and considers such topics as job satisfaction, leadership, and productivity. Health psychology examines how psychological factors contribute to pathology, and demonstrates how psychology can contribute to recovery and illness prevention for such somatic disorders as heart disease, cancer, and diabetes. In environmental psychology, research focuses on how individuals react to their physical environments, and suggests improvements which may be beneficial to psychological health. Other new areas of psychology include counseling psychology, school psychology, forensic psychology, and community psychology.