Over the past few years there have been considerable changes in China's mental health service system. This review provides an overview of the development of mental health services in China, including epidemiological data on psychiatric disorders, utilisation of mental health services, models of mental health service delivery, mental health resources and workforce, mental health policy framework and financial issues. We consider cultural and social factors including the involvement of family members in patient care, urbanisation and internal migration as well as the application of traditional Chinese medicine, which provides implications for mental health research and practice. Additionally, we also discuss major challenges and conclude by providing some specific recommendations on improving mental health services in China.