Several factors appear to impede the development of a valid taxonomy of psychopathology in children and adolescents with mental retardation. These include (a) the lack of a widely accepted definition of psychopathology in mental retardation, (b) disagreement on the nature of the relationship between mental retardation and psychopathology, and (c) insufficient evidence for the reliability and validity of current DSM or ICD systems in this population. In this article, we offer a definition of psychopathology in children with mental retardation; review concepts of the relationship between psychopathology and mental retardation; argue that in moving toward a valid taxonomy factors to be considered should include data from multivariate studies, findings related to behavior phenotypes, and diagnostic considerations with stereotypic behavior and self-injury, organic brain syndromes and pervasive developmental disorders. Finally, we outline a research strategy that may serve as a useful framework for developing a valid taxonomy of psychopathology in this population.