Crystal healing is a pseudoscientific^[1] alternative medicine technique that employs stones and crystals. Adherents of the technique claim that these have healing powers, although there is no scientific basis for this claim.

One method is where the practitioner places crystals on different parts of the body, often corresponding to so-called "chakras"; or else the practitioner places crystals around the body in an attempt to construct an "energy grid", which is purported to surround the client with healing energy.^[2] Despite this, scientific investigations have not validated claims that chakras or energy grids actually exist, nor is there any evidence that crystal healing has any greater effect upon the body than any other placebo.

http://en.wikipedia.org/wiki/Crystal_healing

Crystal Healing; How it actually works.

While there are no scientific studies on the efficacy of crystal healing, there is a study that suggests that crystal healing may induce a placebo effect in a patient who receives this type of treatment. Placebo effects are effects that accompany a treatment that are not directly due to the treatment itself acting on the disease of the patient, according to Christopher French, head of the anomalistic psychology research unit at the University of London. 

In other words, a person may feel better after undergoing crystal healing treatment, but there is no scientific proof that this result has anything to do with the crystals being used during the treatment. In 2001, French and his colleagues at Goldsmiths College at the University of London presented a paper at the British Psychological Society Centenary Annual Conference in Glasgow, in which they outlined their study of the efficacy of crystal healing.

As French pointed out, there are many forms of treatment that are known to have no therapeutic effect other than a placebo effect. However, while these treatments might make you feel better temporarily, there is no proof that they can actually cure diseases or treat health conditions. If you're suffering from a serious medical issue, you should seek treatment from a licensed physician, not an alternative healer, French said.

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Crystal Healing; How it is supposed to work.

Crystal healing proponents believe that crystals and gemstones have properties that facilitate healing. Many sites promoting crystal healing allege that the history of this practice is ancient, dating back at least 6,000 years to the time of the ancient Sumerians of Mesopotamia. Ancient Egyptians are also referenced on such sites as being among the first people to have adorned themselves with crystals — including lapis lazuli, carnelian and turquoise — to ward off illness and negative energy. 

But the philosophy of modern crystal healing is based on traditional concepts borrowed from Asian cultures, most notably the Chinese concept of life-energy (chi or qi) and the Hindu or Buddhist concept of chakras, which are vortices of this life-energy, said to connect the physical and supernatural elements of the body. 

In crystal healing, stones are assigned various properties, though healers have different ideas about which stones possess which properties. Amethyst, for example, is believed by some to be beneficial for the intestines; green aventurine helps the heart; yellow topaz provides mental clarity. Colors red through violet are associated with seven chakra points on the body.

During a treatment session, a crystal healer may place various stones or crystals on your body aligned with these chakra points, roughly in the regions above the head, on the forehead, on the throat, on the chest, on the stomach, on the gut, and on the genital area. The stones used and their positioning may be chosen for the symptoms reported by the patient. This is all influenced by the healer's knowledge of, and belief in, the chakra philosophy of disease and energy imbalances — a philosophy that is largely dismissed by practitioners of Western medicine.

Crystal healing also involves the use of crystals and stones worn on the body or placed under pillows to ward off sickness, shed negative energy or absorb positive energy, according to Crystal Vaults, a company that sells such crystals, which it refers to as "talismans" or "amulets."

Courtesy of  http://www.livescience.com/40347-crystal-healing.html