Structural Equation Modeling (SEM) represents a series of cause-effect relationships between variables combined into composite testable models (Shipley, 2000). It is extensively used by researchers in different disciplines and is a technique often used in psychology.

SEM has attracted attention primarily because it lends itself to effectively studying problems or models that are hard to assess using other procedures. This paper traces the history of SEM in discipline of psychology, and discusses the current developments, the use/misuse of SEM techniques and practical recommendations to direct future research in the discipline.