Major mental disorders such as schizophrenia and affective disorders are highly disabling illnesses. The cultural factors that influence the diagnosis and treatment of these disorders are of paramount clinical significance. We attempted to critically review the cultural factors in relation to the epidemiology, phenomenology, treatment, and outcome of major mental disorders from an Indian perspective, and tried to compare these with the cultural factors identified in major international studies. The clinical expression of major mental disorders was noted to vary across cultures in the review. In addition, the outcome of major mental disorders is reported to be better in developing nations than in the developed countries. Transcultural variations are also noted to exist in pharmacokinetics, pharmacodynamics, traditional healing practices, and psychotherapeutic approaches. The role of cultural factors in severe mental illnesses needs adequate attention from mental health professionals. Continued research on the cultural aspects is required to understand the interplay of all social, cultural, and biological factors. It is important to consider other cultural, traditional, and folk methods for understanding and management of mental illnesses.