This paper summarizes a series of events that were historical milestones in Latin America and the Caribbean in the long road toward restructuring and setting up psychiatric and mental health services to shift from the old and obsolete psychiatric hospital models to other, community-based models. This has been and largely remains the principal challenge that we face. The burden of mental illness is described in terms of morbidity, mortality, and disability. In 1990, it was estimated that psychiatric and neurological disorders accounted for 8.8% of the disability-adjusted life years in Latin America and the Caribbean; in 2004 that burden had grown to 21%. However, the treatment gap (sick people who remain untreated) exceeds 60%; added to that there is a prevailing gap in funding and resources for the treatment of mental health problems. In response to these problems, the Pan American Health Organization (PAHO/WHO) has continued to strengthen its technical cooperation with the countries. The 49th Directing Council of PAHO/WHO approved the Strategy and Plan of Action on Mental Health for the region of the Americas, which constitutes a major historical landmark; for the first time, the ministries of health in every country in the hemisphere studied and approved a work programme to improve mental health care based on the experiences gained and expressing a technical and political commitment. It is a key priority to continue working to restructure mental health services and strengthen intersectoral initiatives to promote mental health; specific problems, such as care for vulnerable groups, child and adolescent mental health, suicide, alcohol abuse, and violence, also pose a great challenge for mental health programs today.