The culture of smoking by patients and staff within mental health systems of care has a long and entrenched history. Cigarettes have been used as currency between patients and as a patient management tool by staff. These settings have traditionally been exempt from smoke-free policy because of complex held views about the capacity of people with mental disorder to tolerate such policy whilst they are acutely unwell, with stakeholders' continuing fierce debate about rights, choice and duty of care. This culture has played a significant role in perpetuating physical, social and economic smoking associated impacts experienced by people with mental disorder who receive care within mental health care settings. The past decade has seen a clear policy shift towards smoke-free mental health settings in several countries. While many services have been successful in implementing this change, many issues remain to be resolved for genuine smoke-free policy in mental health settings to be realized. This literature review draws on evidence from the international published research, including national audits of smoke-free policy implementation in mental health units in Australia and England, in order to synthesise what we know works, why it works, and the remaining barriers to smoke-free policy and how appropriate interventions are provided to people with mental disorder.