Pioneers in this field, such as James Braid and James Esdaile discovered that hypnosis could be used to successfully anesthetize patients for surgeries. James Braid accidentally discovered that one of his patients began to enter a hypnotic state while staring at a fixed light as he waited for his eye examination to begin. Since mesmerism had fallen out of favor, Braid coined the term hypnotism, which is derived from the Greek word for sleep. Braid also used the techniques of monotony, rhythm, and imitation to assist in inducing a hypnotic state. As of 2000, these techniques are still in use.

Research on the effectiveness of hypnotherapy on a variety of medical conditions is extensive. In one study, the use of hypnotherapy did not seem to alter the core symptoms in the treatment of attention-deficit hyperactivity disorder (ADHD); however, it did seem to be useful in managing the associated symptoms including sleep disturbances and tics.
Charcot operated a clinic at the Pitié-Salpêtrière Hospital (thus, known as the "Paris School" or the "Salpêtrière School"), while Bernheim had a clinic in Nancy (known as the "Nancy School"). Charcot, who was influenced more by the Mesmerists, argued that hypnotism was an abnormal state of nervous functioning found only in certain hysterical women. He claimed that it manifested in a series of physical reactions that could be divided into distinct stages. Bernheim argued that anyone could be hypnotised, that it was an extension of normal psychological functioning, and that its effects were due to suggestion. After decades of debate, Bernheim's view dominated. Charcot's theory is now just a historical curiosity.[59]
The central theoretical disagreement regarding hypnosis is known as the "state versus nonstate" debate. When Braid introduced the concept of hypnotism, he equivocated over the nature of the "state", sometimes describing it as a specific sleep-like neurological state comparable to animal hibernation or yogic meditation, while at other times he emphasised that hypnotism encompasses a number of different stages or states that are an extension of ordinary psychological and physiological processes. Overall, Braid appears to have moved from a more "special state" understanding of hypnotism toward a more complex "nonstate" orientation.[citation needed]
Mesmer performed his technique by passing his hands up and down the patient's body. The technique was supposed to transmit magnetic fluid from his hands to the bodies of his patients. During this time period, there was no clear delineation between health conditions that were physical or psychological in nature. Although Mesmer did not realize it at that time, his treatments were most effective for those conditions that were primarily psychosomatic.
Australian hypnotism/hypnotherapy organizations (including the Australian Hypnotherapists Association) are seeking government regulation similar to other mental health professions. However, the various tiers of Australian government have shown consistently over the last two decades that they are opposed to government legislation and in favour of self-regulation by industry groups.[51]
However, Freud gradually abandoned hypnotism in favour of psychoanalysis, emphasizing free association and interpretation of the unconscious. Struggling with the great expense of time that psychoanalysis required, Freud later suggested that it might be combined with hypnotic suggestion to hasten the outcome of treatment, but that this would probably weaken the outcome: "It is very probable, too, that the application of our therapy to numbers will compel us to alloy the pure gold of analysis plentifully with the copper of direct [hypnotic] suggestion."[62]

Since hypnotherapy is an adjunct form of therapy, used along with other forms of psychological or medical treatment, there are many applications. Hypnotherapy can be used to treat anxiety, phobias, substance abuse including tobacco, sexual dysfunction, undesirable spontaneous behaviors, and bad habits. It can be used to help improve sleep, learning disorders, communication, and relationship issues. Hypnotherapy can aid in pain management and help resolve medical conditions such as digestive disorders, skin issues, and gastrointestinal side effects of pregnancy and chemotherapy. It can also be used by dentists to help patients control their fears or to treat teeth grinding and other oral conditions.