Psychotherapy services face increasing demand but are vulnerable to critical scrutiny by service purchasers seeking evidence of cost‐effectiveness. Psychotherapy research, although it can benefit practitioners, cannot adequately address these concerns because of poor external validity and it is argued that complementary strategies are needed. A number of service‐based evaluative methods are reviewed and the distinctions clarified between service evaluation, operational research, professional audit, service audit, quality assurance and total quality management. Maxwell's (1984) six category framework is used to examine a number of issues in psychotherapy services including the assessment process, treatment‐of‐choice decisions, predicting negative effects of treatment, dose–response in psychotherapy, brief interventions, therapist competence, clinical significance, cost effectiveness and measures of psychotherapy service inputs, process and outcomes. This review advocates reflective practice within a self‐evaluating psychotherapy service and a systemic approach which can take account of the perspectives of patients, purchasers, service managers, referrers and pr