Sensory processing is disrupted in several psychiatric disorders, including schizophrenia, bipolar disorder, and autism spectrum disorder. In this review, we focus on the electrophysiological auditory steady-state response (ASSR) driven by high-frequency stimulus trains as an index for disease-associated sensory processing deficits. The ASSR amplitude is suppressed within the gamma band (≥30 Hz) among these patients, suggesting an imbalance between GABAergic and N-methyl-D-aspartate (NMDA) receptor-mediated neurotransmission. The reduced power and synchronization of the 40-Hz ASSR are robust in patients with schizophrenia. In recent years, similar ASSR deficits at gamma frequencies have also been reported in patients with bipolar disorder and autism spectrum disorder. We summarize ASSR abnormalities in each of these psychiatric disorders and suggest that the observed commonalities reflect shared pathophysiological mechanisms. We reviewed studies on phase resetting in which a salient sensory stimulus affects ASSR. Phase resetting induces the reduction of both the amplitude and phase of ASSR. Moreover, phase resetting is also affected by rare auditory stimulus patterns or superimposed stimuli of other modalities. Thus, sensory memory and multisensory integration can be investigated using phase resetting of ASSR. Here, we propose that ASSR amplitude, phase, and resetting responses are sensitive indices for investigating sensory processing dysfunction in psychiatric disorders.