In the past, the mentally ill used to be relentlessly stigmatized and their basic needs grossly neglected in China. Only the coastal cities with their Western oriented universities provided Western type mental healthcare. In general, traditional Chinese medicine (TCM) embracing medicinal herbs and acupuncture was practiced. Mental hospitals were non-existent before 1889 and care of the chronically mentally ill rested with their families and the community; however, the prevalence and spectrum of mental disorders were similar to those in Western countries. After the establishment of the People's Republic of China old-fashioned mental hospitals were founded. The "Great Leap Forward" starting in 1958 envisaged the creation of a mental healthcare system based on Soviet Union standards. Psychiatry had a strong biological orientation, and psychotherapy did not exist. Psychology was rejected as not being science and was not taught at universities before 1978. With the Reform and Opening Policy in 1978 the education of psychology was stepped up. Psychology was introduced as an academic discipline in 1978 and psychotherapy and psychosomatic medicine were established in mental healthcare. The current mental healthcare in China resembles the standard in Germany before the "Psychiatrie-Enquete" (expert commission official report). With the Mental Health Act adopted in 2013 after 27 years of planning, China has laid the legal foundation for planning and establishing a humane system of mental healthcare. The Act safeguards patients' human and individual rights and increases trust in psychiatric institutions. It guarantees the right to optimal treatment and provides legal protection in cases of malpractice.