Epidemiological studies report prevalence rates for psychiatric disorders from 9.5 to 370/1000 populations in India. This review critically evaluates the prevalence rate of mental disorders as reported in Indian epidemiological studies. Extensive search of PubMed, NeuroMed and MEDLARS using search terms "psychiatry" and "epidemiology" was done. Manual search of literature was also done. Retrieved articles were systematically selected using inclusion and exclusion criteria. Only sixteen prevalence studies fulfilled the study criteria. Most of the epidemiological studies done in India neglected anxiety disorders, substance dependence disorders, co-morbidity and dual diagnosis. The use of poor sensitive screening instruments, single informant and systematic underreporting has added to the discrepancy in the prevalence rate. The prevalence of mental disorders reported in epidemiological surveys can be considered lower estimates rather than accurate reflections of the true prevalence in the population. Researchers have focused on broad non-specific, non-modifiable risk factors, such as age, gender and social class. Future research focused on the general population, longitudinal (prospective), multi-centre, co-morbid studies, assessment of disability, functioning, family burden and quality of life studies involving a clinical service providing approach, is required.