Unlike a linear power supply, the pass transistor of a switching mode supply switches very quickly (typically between 50 kHz and 1 MHz) between full-on and full-off states, which minimizes wasted energy. Voltage regulation is provided by varying the ratio of on to off time. In contrast, a linear power supply must dissipate the excess voltage to regulate the output. This higher efficiency is the chief advantage of a switch-mode power supply.

Switching regulators are used as replacements for the linear regulators when higher efficiency, smaller size or lighter weight are required. They are, however, more complicated, their switching currents can cause electrical noise problems if not carefully suppressed, and simple designs may have a poor power factor.

A linear regulator maintains the desired output voltage by dissipating excess power in ohmic losses (e.g., in a resistor or in the collector–emitter region of a pass transistor in its active mode). A linear regulator regulates either output voltage or current by dissipating the excess electric power in the form of heat, and hence its maximum power efficiency is voltage-out/voltage-in since the volt difference is wasted. In contrast, a switched-mode power supply regulates either output voltage or current by switching ideal storage elements, like inductors and capacitors, into and out of different electrical configurations. Ideal switching elements (e.g., transistors operated outside of their active mode) have no resistance when "closed" and carry no current when "open", and so the converters can theoretically operate with 100% efficiency (i.e., all input power is delivered to the load; no power is wasted as dissipated heat).

For example, if a DC source, an inductor, a switch, and the corresponding electrical ground are placed in series and the switch is driven by a square wave, the peak-to-peak voltage of the waveform measured across the switch can exceed the input voltage from the DC source. This is because the inductor responds to changes in current by inducing its own voltage to counter the change in current, and this voltage adds to the source voltage while the switch is open. If a diode-and-capacitor combination is placed in parallel to the switch, the peak voltage can be stored in the capacitor, and the capacitor can be used as a DC source with an output voltage greater than the DC voltage driving the circuit. This so-called boost converter acts like a step-up transformer for DC signals. A buck–boost converter works in a similar manner, but yields an output voltage which is opposite in polarity to the input voltage. Other buck circuits exist to boost the average output current with a reduction of voltage.

In an SMPS, the output current flow depends on the input power signal, the storage elements and circuit topologies used, and also on the pattern used (e.g., pulse-width modulation with an adjustable duty cycle) to drive the switching elements. Typically, the spectral density of these switching waveforms has energy concentrated at relatively high frequencies. As such, switching transients, like ripple, introduced onto the output waveforms can be filtered with small LC filters.

Hydraulic analogy explains the basic principle.

The main advantage of this method is greater efficiency because the switching transistor dissipates little power when it is outside of its active region (i.e., when the transistor acts like a switch and either has a negligible voltage drop across it or a negligible current through it). Other advantages include smaller size and lighter weight (from the elimination of low frequency transformers which have a high weight) and lower heat generation due to higher efficiency. Disadvantages include greater complexity, the generation of high-amplitude, high-frequency energy that the low-pass filter must block to avoid electromagnetic interference (EMI), and a ripple voltage at the switching frequency and the harmonic frequencies thereof.

Very low cost SMPSs may couple electrical switching noise back onto the mains power line, causing interference with A/V equipment connected to the same phase. Non-power-factor-corrected SMPSs also cause harmonic distortion.

SMPSs can be classified into four types according to the input and output waveforms:

There are two main types of regulated power supplies available: SMPS and linear. The following table compares linear regulated and unregulated AC-to-DC supplies with switching regulators in general: