Abstract Purpose This study aims to examine time trends in the ability to correctly identify schizophrenia and major depression within the German general population from 1990 to 2020, as an indicator of changing mental health literacy (MHL). Additionally, we investigated shifts in the use of stigmatizing language. Methods Our analysis is based on four waves of representative population surveys in Germany in 1990/1993 (West Germany: N = 2044, East Germany: N = 1563), 2001 (N = 5025), 2011 (N = 2455), and 2020 (N = 3042) using identical methodology. Respondents were presented with an unlabelled case vignette describing a person who exhibited symptoms of either schizophrenia or major depression. Participants were then asked to name the problem described in the vignette using an open-ended question. Results From 1990/1993 to 2020, correct identification of schizophrenia increased from 18% to 34% and from 27% to 46% for major depression. However, derogatory labels remained constant throughout all survey waves, particularly for schizophrenia (19% in 1990/1993 and 18% in 2020). For depression, more trivializing and potentially devaluing statements were recorded. Conclusion Despite the increasing use of psychiatric terminology among the general population, the persistence of derogatory labels suggests that improved MHL, reflected in higher recognition rates, may not automatically translate into a reduction in stigmatizing language. With depression, a normalization and trivialization of a severe illness could pose new challenges to people with major depression. Dedicated efforts to combat the stigma of severe mental illness are still needed.