Background Despite a high burden of mental health problems among refugees, there is limited knowledge about effective mental health care provision for this group. Although substantial efforts in understanding the complexity of cross-cultural psychotherapy – which in the context of this study we use to refer to therapy with client and therapist of different cultural backgrounds – have been made, there remains a dearth of research exploring barriers for effective cross-cultural psychotherapy. This study aimed at narrowing this gap in knowledge by exploring major challenges encountered by psychotherapists in cross-cultural psychotherapy and strategies which have proven useful in overcoming such challenges. Methods We employed a qualitative study design, conducting semi-structured in-depth interviews with 10 purposely selected psychotherapists working with refugees in Germany. Respondents were from varying theoretical background and had varying levels of experience. Data were analyzed using a thematic approach, following a mix of deductive and inductive coding. Results Respondents reported three main challenges in their cross-cultural practice: different or unrealistic expectations of clients towards what psychotherapy would offer them; challenges grounded in different illness explanatory models; and communication challenges. In dealing with these challenges, respondents recommended psychoeducation to overcome issues related to problematic expectations towards psychotherapy; “imagining the real”, identifying “counter magic” and other client-appropriate resources to deal with issues related to clients’ foreign illness attributions; and translators in dealing with communication barriers, though the latter not univocally. Conclusions Results show that psychotherapy with refugees can be very successful, at least from the psychotherapist perspective, but also poses significant challenges. Our findings underline the importance of developing, testing, and institutionalizing structured and structural approaches to training psychotherapists in cross-cultural therapy at scale, to accommodate the rising mental health care need of refugees as a client group.