Racism and psychiatry have been 'linked' in the public imagination, largely because psychiatry is seen as an instrument of social control, and racism as a different form of oppression which permeates society at large. Racism in psychiatry is often believed to be the mediating factor in cases of 'psychiatric misdiagnosis' and 'mismanagement.' Misdiagnosis includes underdiagnosis and overdiagnosis; this can account for the non-delivery of appropriate treatments because of an erroneous diagnostic label. In some instances this leads to a deferred intervention, or in some ethnic groups, help-seeking is delayed for unnecessarily long periods. Racism is not a recent phenomenon. The blunt application of the word 'racism' perpetuates conceptual confusion about what is meant by the term, what processes are taking place, how much of the processes are institutionalized or individual and to what degree individuals are aware of the impact of their actions. We propose a way of understanding racism in psychiatric practice, and suggest that within such a framework, the therapist/professional and the patient can work together towards improving patient care.