This article discusses the dilemma faced by psychologists in responding to diversity. It is based on a qualitative review of relevant literature over the past decade. It first describes psychologists as frontrunners in recognizing the uniqueness and autonomy of each of their diverse clients but within the biomedical model that locates problems within clients. This raises a dilemma vis-a-vis diversity issues which are associated with discrimination suffered by minority groups who are best supported by changes in social structures and processes. An account is then given of an increasing adoption of a biopsycho"social" model, with further influence of the social model of disability and mental health. Evidence of the trend is explored in a new commitment to the human rights agenda, changes in ethical codes, and in psychologists' engagement with intervention at macro systems levels as in the promotion of inclusive education. The review concludes with the implications of these trends for greater changes in training institutions to reflect openness to diversity, and in training programmes to promote an understanding of, and skills in, using social approaches to addressing the needs of clients who are at risk of being misunderstood, devalued, and discriminated against.