Our understanding of the placebo effect has deepened through intensive research activity during recent years. It seems important to make a clear distinction between the placebo effect in clinical trials and the placebo effect in clinical practice. In the first scenario, our effects are directed towards minimising its influence on the results whereas, in the second scenario, we might consider maximising it for the benefit of the patient. It also seems important to differentiate between the 'true' and the 'perceived' placebo effect. The 'perceived' placebo effect equals the 'true' placebo effect plus a multitude of other factors. This article reviews new research on the mechanisms of placebo effects, discusses the role of placebos in clinical trials and explores the place of placebo in clinical practice. It concludes that a better understanding of this area will probably benefit basic research, clinical research and patient care.