The stochastic Schrodinger equation, a novel method for describing the
dissipative dynamics of open quantum systems interacting with their e
nvironment, is applied to some nonlinear optical processes, namely non
linear absorption and second-harmonic generation, the latter also in t
he range of instabilities and classical chaotic behaviour. Where possi
ble the results are compared with numerical simulations of the positiv
e P representation, which in some cases are found to give unreliable r
esults.