This report presents the results and outlines the key achievements and challenges faced by mechanism set up by the Council Decision in 2007. In 2006, 7 new psychoactive substances were officially notified for the first time in the European Union through the Early-Warning System (EWS). The number of new substances notified in 2006 was smaller than those notified in 2005. However, the chemical make-up of the reported substances was more diverse – some of them belonged to chemical groups never reported before through the EWS, such as indans and benzodifuranyls. Two of the seven reported substances had pronounced hallucinogenic effects, whereas all others exhibited predominantly stimulant effects. Of significance is the fact that of the seven new substances, three belonged to the piperazine family. The report also details the active monitoring of mCPP and the launch of information collection for production the of a Joint Report on BZP. Furthermore, the report notes the challenges with respect to identifying comprehensive information sources and cost-effective mechanisms to allow a clear identification of the use of notified substances in the manufacture of medicinal products by the pharmaceutical industries. In addition, it presents issues of a more general nature related to the identification of new substances and analysis of known drugs.