Stress in general can be defined as a state of threatened balance, equilibrium or harmony that tends to disturb the homeostasis of the body. Stress can be of many kinds viz. psychological, physiological, social, emotional, and nutritional. Albeit the distinct kinds of stress stated in the aforementioned stress list, it is hard to bring out a clear distinction between them since each stress may precede or succeed the manifestation of any other. The studies discussed in the review elucidate effects of psychological stressors (PS) on diseases such as cancer, AIDS, epidermal abnormalities, obesity, and various inflammatory diseases like colonic inflammations, Coronary Artery Disease (CAD), Coronary Heart Disease (CHD), asthma. From these studies, further attempt was made to establish the basic mechanisms which come into play during a stressor stimulus and consequently modulate the physiology of the body. In this review we have highlighted effects of PS on diseases while simultaneously building on the modes of operation of PS to alter physiology and its further implications in developing potential psychotherapeutic methods for disease treatment.