There is a tension between the need for scientifically valid trials of new psychotropic drugs and concern about conducting placebo-controlled trials, the trials psychopharmacologists consider the gold standard trial, when this requires that some patients be denied existing effective therapy. This paper will review the scientific principles supporting the need for placebo-controlled trials in depression and schizophrenia, and will provide preliminary data on failure rates of placebo-controlled trials for these disorders, as illustrations of the application of these principles. Next, the ethical issues pertinent to the conduct of placebo-controlled trials for these two serious psychiatric disorders will be reviewed. Preliminary data on suicides in placebo-controlled depression and schizophrenia trials will be presented to argue for the ethical acceptability of the conduct of placebo-controlled trials in these two conditions.