Displacement of people from their homes, families and countries is a current global crisis, with over 70 million people forcibly on the move. A substantial proportion of these people will end up in regions with a different language and culture, where they are registered as refugees or asylum seekers. Due to the underlying reasons for displacement (including conflicts, persecution or violation of human rights), displaced people are severely stress-exposed, which continues into their post-migration life and increases risk for developing psychiatric disorders such as post-traumatic stress disorder and other anxiety disorders and mood disorders. While landmark studies have illustrated the increased prevalence of psychopathology in asylum seeker and refugee populations following pre-/post-displacement stress, few studies add to our understanding of the basic biological mechanisms underpinning risk to psychiatric disorders in these populations. Additionally, the mechanisms underlying resilience despite significant adversity remain unclear. Understanding the molecular mechanisms underpinning the development of psychiatric disorders in refugees can propel treatments (both drug and non-drug) that are capable of influencing biology at the molecular level, and the design of interventions. In the following review, we summarise the status quo of research investigating the pathophysiology of psychiatric disorders in refugees, and propose new ways to address gaps in knowledge with multidisciplinary research.