Objectives: In many countries, the total rate of psychiatric disorders tends to be higher in urban areas than in rural areas. The relevance of this phenomenon is that it may help in identifying environmental factors that are important in the pathogenesis of mental disorders. Moreover, urban preponderance suggests that the allocation of funds and services should take urbanization levels into account. Method: The Netherlands Mental Health Survey and Incidence Study (NEMESIS) used the Composite International Diagnostic Interview (CIDI) to determine the prevalence of DSM-III-R disorders in a sample of 7,076 people aged 18-64. The sample was representative of the population as a whole. The study population was assigned to five urbanization categories defined at the level of municipalities. The association between urbanization and 12-month prevalence rates of psychiatric disorders was studied using logistic regression taking several confounders into account. Results: The prevalence of psychiatric disorders gradually increased over five levels of urbanization. This pattern remained after adjustment for a range of confounders. Comorbidity rates also increased with level of urbanization. Conclusion: This study confirms that psychiatric disorders are more common and more complex in more urbanized areas. This should be reflected in service allocation and may help in identifying environmental factors of importance for the aetiology of mental disorders. © Springer-Verlag 2007.