Background Happiness is a lasting state and is associated with the absence of negative emotions, the presence of positive emotions, life satisfaction, social engagement and objectives in life. Researchers have demonstrated the benefits of happiness in many aspects of life, but few studies have been conducted within psychiatry.Objectives To develop a critical literature review of studies on happiness and health in order to bring some further and useful information to psychiatry updating the article “Happiness: a review” published in 2007 in Revista de Psiquiatria Clínica.Methods Computational searching was undertaken of digital data basis (PubMed and SciELO) using the keywords “happiness” and “health”. One hundred twenty-seven papers published between 2004 and 2014 were found, but only 76 had the keywords in the title or abstract and with this were selected.Results Personality traits, such as self-direction; being married; being involved in physical and leisure activities; higher educational backgrounds and intelligence quotient; religiosity, volunteering and altruism; good physical and mental health; were positively related to happiness.Discussion Analysis of the concept of happiness and its associated emotions may be more complex than describing the symptoms of psychiatric disorders. Despite this, the study of happiness brings several positive implications for psychiatry.