The atypical antipsychotic quetiapine fumarate is available both as an immediate release (IR) and as an extended release (XR) formulation allowing flexibility of dosing for individual patients. Approved uses of quetiapine XR include the treatment of schizophrenia (including maintenance therapy for prevention of relapse), the treatment of bipolar disorder (manic and depressive episodes), and the prevention of recurrence in patients with bipolar disorder who respond to quetiapine XR. This narrative review provides an update on quetiapine XR in these indications. The pharmacological profile of quetiapine, including a moderate affinity for dopamine D(2) receptors and higher affinity for serotonin 5-hydroxytryptophan (5-HT)(2A) receptors, may explain its broad efficacy and low propensity for extrapyramidal symptoms (EPS). The XR formulation has similar bioavailability but prolonged plasma levels compared with the IR formulation, allowing for less frequent (once-daily) dosing. Clinical studies have confirmed the efficacy of quetiapine XR in relieving the acute symptoms of schizophrenia during short-term trials, and reducing the risk for relapse in long-term studies. Direct switching from the IR formulation to the same dose of the XR formulation did not reveal any loss of efficacy or tolerability issues, and switching patients to quetiapine XR from conventional or other atypical antipsychotics (for reasons of insufficient efficacy or tolerability) also proved to be beneficial and generally well tolerated. In bipolar disorder, quetiapine XR has also proven effective in relieving acute depressive and manic symptoms. Adverse events with quetiapine XR in patients with either schizophrenia or bipolar disorder are similar to those associated with the IR formulation, the most common being sedation, dry mouth, somnolence, dizziness, and headache. The low propensity for EPS is maintained with the XR formulation. Overall, evidence from clinical trials suggests that quetiapine XR is an effective and generally well-tolerated treatment option in patients with schizophrenia and bipolar disorder.