Objective: This paper reports on a study designed within the framework of the National Survey of Mental Health and Wellbeing to: estimate the prevalence of psychoses in urban areas of Australia; identify profiles of symptomatology, impairments and disabilities; collect information on services received and needed; and explore quality of life issues in a broadly representative sample of people with psychotic illnesses.Method: The study was conducted over four areas in the Australian Capital Territory, Queensland, Victoria and Western Australia, as a two-phase survey: (i) a census and screening for psychosis of all individuals who made contacts with mental health services during a period of 1 month in 1997; and (ii) interviews with a stratified random sample (n = 980) of the screen-positive individuals (n = 3800) using a standardised instrument.Results: The point prevalence (1 month) of psychotic disorders in the urban population aged 18-64 is in the range of 4-7 per 1000 with a weighted mean of 4.7 per 1000. People with psychotic disorders experience high rates of functional impairments and disability, decreased quality of life, persistent symptoms, substance-use comorbidity and frequent side effects of medication. Although the utilisation of hospital-based and community mental health services, as well as of public and non-governmental helping agencies, is high, the majority live in extreme social isolation and adverse socioeconomic circumstances. Among the many unmet needs, the limited availability of community-based rehabilitation, supported accommodation and employment opportunities is particularly prominent.Conclusions: The so-called 'low-prevalence' psychotic disorders represent a major and complex public health problem, associated with heavy personal and social costs. There is a need for a broad programmatic approach, involving various sectors of the community, to tackle the multiple dimensions of clinical disorder, personal functioning and socioeconomic environment that influence the course and outcome of psychosis and ultimately determine the effectiveness of service-based intervention.