The impact of meeting needs on quality of life in the severely mentally ill is investigated in this study. An epidemiologically representative sample of 133 patients meeting ICD-10 criteria for psychosis completed standardized instruments for measuring needs and quality of life. Covariance structure modelling was used to investigate the extent to which latent factors of met and unmet need were associated with latent quality of life. Patients rated about 0.7 more total (met plus unmet) needs than staff, mainly due to differences in rating unmet need. Patient ratings were more reliable than ratings by others of unmet need and quality of life. Both underlying unmet need and met need were negatively associated with underlying quality of life, but unmet need was the stronger relationship. The patient's perspective on their difficulties (especially their unmet needs) must be central to mental health care.