OBJECTIVE This paper aims to discuss the contribution of epidemiology to aspects of public policy that have either a direct influence on mental health and mental disorders, or an indirect effect by influencing environmental factors which influence mental health. Both kinds of public policy will need to be considered by governments wishing to protect, promote and improve the mental health of their populations. The paper draws on information from both relatively wealthy and low-income countries. METHODS The paper defines epidemiology and mental health policy, sets out the range of government policies which may have an impact on mental health, and explores the ways in which epidemiology may contribute to mental health policy in relation to service inputs, processes and outcomes as well as to wider government policies. The paper also examines the advantages and disadvantages of different sources of data. RESULTS There are a number of reasons to carry out large-scale surveys of psychiatric morbidity. First, effective policy should address the needs of the population, which can best be assessed by the epidemiology and the social and economic causes and consequences of psychiatric morbidity. Secondly, representative information in a defined geographic area can document the use of existing services and can estimate the extent of unmet needs and the services required meeting those needs. Thirdly, valid information on prevalence and associated risk factors of presumed causal importance allow aetiological hypotheses to be generated and tested and models developed for prevention. Finally, by repeating community surveys, it is possible to monitor the health of the population and trends. Epidemiological findings emphasize the importance of mental health policy addressing the key role of primary care, the social context and social consequences of disorder, the importance of addressing services for children, the need to reduce premature mortality from suicide and from physical illness. Epidemiological findings show that mental health and mental disorders are related to the environment both in its structural physical sense and in the sense of the social processes connected to and influenced by particular settings. Thus epidemiology can contribute to general policies on employment and unemployment, housing and homelessness, education and women's issues. CONCLUSIONS Mental health policy is increasingly recognized as an essential area for countries wishing to enhance their economic, social and human capital. Epidemiological data are a basic prerequisite to informing such policies. Expert professional and epidemiological advice to ministries is essential if policy is to be rooted in the evidence for population needs, risk factors, effective treatments and services, and measurement of outcomes. It is therefore important to develop the capacity for policy work in the psychiatric profession by including public health, epidemiology and policy placements for young psychiatrists.