Irritable bowel syndrome (IBS) is a common chronic disorder seen in gastroenterology and primary care practice. It is characterized by recurrent abdominal pain or discomfort associated with disturbed bowel function. It is a heterogeneous disorder with varying treatments, and in this regard physicians sometimes struggle with finding the optimal approach to management of patients with IBS. This disorder induces high health care costs and variably reduces health-related quality of life. IBS is in the class of functional gastrointestinal disorders, and results from dysregulation of central and enteric nervous system interactions. Psychosocial factors are closely related to their gut physiology, associated cognitions, symptom manifestations and illness behavior. Therefore, it is important for the physician to recognize the psychosocial issues of patients with IBS and in addition to build a good patient-physician relationship in order to optimize treatment. This review focuses on the interaction between psychological and physiological factors associated with IBS by using a biopsychosocial model. In this article, we describe (1) the predisposing psychological features seen in early life; (2) the psychological factors associated with life stress, the symptom presentation, and their associated coping patterns; (3) gut pathophysiology with emphasis on disturbances in motility, visceral hypersensitivity and brain-gut interactions; and finally (4) the clinical outcomes and effective treatments including psychotherapeutic methods.