Purpose This article explores psychological ownership (PO) in family firms (FFs); its impact on interpersonal relationships, attitudes and behaviors within the organization; and its importance for long-term success. It also highlights the factors that contribute to PO in these types of businesses. Design/methodology/approach The article conducts a literature review that utilizes existing research to delve into the phenomenon of PO within the context of FFs. Findings The article emphasizes that PO significantly impacts employee behavior and attitudes toward FFs. It shows the favorable influence of PO on employees' conduct and mindset. However, excessive PO can lead to disputes and obstruct the transfer of control. Practical implications The success of family businesses depends on nurturing strong, positive PO in future generations and among nonfamily members. Originality/value The article contributes to PO literature in FFs by analyzing its influence on FFs. It highlights factors affecting PO formation and its consequences and highlights novel lines of future research.