Pros:

Utilize all of Photoshop's features (retain adjustment layers, masks, shapes, clipping paths, layer styles, blending modes, smart objects).
Tight integration between Adobe products, you can directly import a Photoshop file into Illustrator, InDesign, etc.
Open saved file with layers.
Useful if you need to maintain transparency.
You can save 16-bits-per-channel and high dynamic range (HDR) 32-bits-per-channel images as PSD files.

Cons:

Large file size.
PSD is proprietary to Adobe. So it is not widely supported by other apps like TIFF is.

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: What are Pros and Cons for using PSD formats? What are Pros and Cons for using PSD formats?

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