Perphenazine is roughly five times as potent as chlorpromazine; thus perphenazine is considered a medium-potency antipsychotic.

Perphenazine is used to treat psychosis (e.g. in schizophrenics) and the manic phases of bipolar disorder. Perphenazine effectively treats the positive symptoms of schizophrenia, such as hallucinations and delusions, but its effectiveness in treating the negative symptoms of schizophrenia, such as flattened affect and poverty of speech, is unclear. Earlier studies found the typical antipsychotics to be ineffective or poorly effective in the treatment of negative symptoms,^[4] but two recent, large-scale studies found no difference between perphenazine and the atypical antipsychotics.^[5]

In low doses it is used to treat agitated depression (together with an antidepressant). Fixed combinations of perphenazine and the tricyclic antidepressant amitriptyline in different proportions of weight exist (see Etrafon below). When treating depression, perphenazine is discontinued as fast as the clinical situation allows.^{[citation needed]} Perphenazine has no intrinsic antidepressive activity. Several studies show that the use of perphenazine with fluoxetine (Prozac) in patients with psychotic depression is most promising, although fluoxetine interferes with the metabolism of perphenazine, causing higher plasma levels of perphenazine and a longer half-life. In this combination the strong antiemetic action of perphenazine attenuates fluoxetine-induced nausea and vomiting (emesis), as well as the initial agitation caused by fluoxetine. Both actions can be helpful for many patients.

Perphenazine has been used in low doses as a 'normal' or 'minor' tranquilizer in patients with a known history of addiction to drugs or alcohol, a practice which is now strongly discouraged.^{[6][citation needed]}

Perphenazine has sedating and anxiolytic properties, making the drug useful for the treatment of agitated psychotic patients and, in high doses (up to 100 mg per day), for patients with life-threatening (febrile) catatonia, a state in which the patients are extremely agitated, but unable to express themselves. In this situation perphenazine may be used together with electroconvulsive therapy and correction of electrolytes and fluids in the body.

A valuable off-label indication is the short-time treatment of hyperemesis gravidarum, in which pregnant women experience violent nausea and vomiting. This problem can become severe enough to endanger the life of the unborn. As perphenazine has not been shown to be teratogenic and works very well, it is sometimes given orally in the smallest possible dose.