Psychiatric diseases are multifaceted disorders with complex etiology, recognized to have strong heritable components. Despite intense research efforts, genetic loci that substantially account for disease heritability have not yet been identified. Over the last several years, epigenetic processes have emerged as important factors for many brain diseases, and the discovery of epigenetic processes in germ cells has raised the possibility that they may contribute to disease heritability and disease risk. This review examines epigenetic mechanisms in complex diseases and summarizes the most illustrative examples of transgenerational epigenetic inheritance in mammals and their relevance for brain function. Environmental factors that can affect molecular processes and behavior in exposed individuals and their offspring, and their potential epigenetic underpinnings, are described. Possible routes and mechanisms of transgenerational transmission are proposed, and the major questions and challenges raised by this emerging field of research are considered.