Reviewed in this article are selected recent advances and future challenges for psychiatric epidemiology. Major advances in descriptive psychiatric epidemiology in recent years include the development of reliable and valid fully structured diagnostic interviews, the implementation of parallel cross-national surveys of the prevalences and correlates of mental disorders, and the initiation of research in clinical epidemiology. Remaining challenges include the refinement of diagnostic categories and criteria, recognition and evaluation of systematic underreporting bias in surveys of mental disorders, creation and use of accurate assessment tools for studying disorders of children, adolescents, the elderly, and people in less developed countries, and setting up systems to carry out small area estimations for needs assessment and programme planning. Advances in analytical and experimental epidemiology have been more modest. A major challenge is for psychiatric epidemiologists to increase the relevance of their analytical research to their colleagues in preventative psychiatry as well as to social policy analysts. Another challenge is to develop interventions aimed at increasing the proportion of people with mental disorders who receive treatment. Despite encouraging advances, much work still needs to be conducted before psychiatric epidemiology can realize its potential to improve the mental health of populations.