In the last few decades, therapeutic horse-riding has become recognized as a progressive form of therapy, particularly for people with disabilities. Although there is a substantial amount of literature that supports the physical benefit of therapeutic riding, only anecdotal evidence exists in relation to its psychological benefits. The purpose of this paper was to develop hypotheses about the mechanisms by which therapeutic riding might have a beneficial psychological effect. These hypotheses can then be tested, leading to a more detailed knowledge base. To develop these hypotheses, we examined the current literature to identify the implied hypotheses about why horse riding might be psychologically beneficial. Three potential hypotheses emerged from the literature, namely, (1) that the psychological benefits of therapeutic riding are actually unrelated to the horse; (2) that the horse provides a particularly positive context within which psychological gains are facilitated; and (3) that the horse itself has specific therapeutic qualities that bring about unique changes not otherwise likely to occur. The challenge for researchers in this area is to design studies that adequately test these competing hypotheses.