Loxapine is an antipsychotic used in psychiatry for over 40 years with a well-established profile. Loxapine is a dibenzoxazepine tricyclic antipsychotic agent, available for oral, intramuscular and inhalatory administration. In the light of the recent approval by the regulatory agencies of inhaled loxapine for use in the acute treatment of mild-to-moderate agitation in adults affected with schizophrenia or bipolar disorder, this article aims to critically review the available literature on loxapine, irrespective of its formulation. This review examines the efficacy and tolerability of the various formulations of loxapine in the treatment of agitation and aggression in patients affected with schizophrenia, bipolar disorder and other psychiatric conditions. A comprehensive and systematic literature search of PubMed/MEDLINE was conducted, and relevant pharmacodynamic and pharmacokinetic data was included. The findings from the literature were critically reviewed and synthesized. The available data suggests that the antipsychotic efficacy of loxapine is similar to the efficacy of other typical or atypical antipsychotics, with an adverse effects profile comparable to that of the typical antipsychotics at high doses for chronic treatment. As an acute treatment in agitation associated with schizophrenia or bipolar disorder, inhaled loxapine was developed as an innovative and rapid option which appears to be efficacious and tolerable.