BACKGROUND Mental health is increasingly acknowledged as a crucial public health issue in South Africa (SA). However, it is not given the priority it deserves on policy agendas in this and many other low- and middle-income countries. The aim of this analysis is to describe the content of mental health policy and the process of its development in SA. METHODS Quantitative data regarding SA's mental health system were gathered using the World Health Organization (WHO) Assessment Instrument for Mental Health Systems. The WHO Checklist for Mental Health Policy and Plans was completed for SA's 1997 mental health policy guidelines. Semi-structured interviews provided understanding of processes, underlying issues and interactions between key stakeholders in mental health policy development. RESULTS There is uncertainty at provincial level regarding whether the 1997 policy guidelines should be considered national policy. At national level the guidelines are not recognized as policy, and a new policy is currently being developed. Although the guidelines were developed through wide consultation and had approval through national policy development processes, difficulties were encountered with dissemination and implementation at provincial level. The principles of these policy guidelines conform to international recommendations for mental health care and services but lack clear objectives. CONCLUSIONS The process of mental health policy implementation has been hindered by the low priority given to mental health, varying levels of seniority of provincial mental health coordinators, limited staff for policy and planning, varying technical capacity at provincial and national levels, and reluctance by some provincial authorities to accept responsibility for driving implementation. CONCLUSIONS These findings highlight the importance of national leadership in the development of new mental health policy, communication between national and provincial levels, the need for provincial structures to take responsibility for implementation, and capacity building to enable policy makers and planners to develop, monitor and implement policy.