Most of the world’s population now lives in cities, with 90% of Australians living in urban settlements of more than 10 000 people. Urban environments help shape population health, particularly among disadvantaged people, where poor health is concentrated. A growing body of research has focussed on the association between cities and mental health. Three hypotheses have been proposed to explain this association: psychosocial stressors; concentrated disadvantage; and social drift. It remains unclear, however, how the characteristics of urban environments are related to each other and to mental health, and what might be the pathways underpinning the experience of different individuals. With one in five Australian adults meeting the diagnostic criteria for a mental disorder each year, investigation of the relationship between urban environments and mental health is urgently needed. This paper briefly reviews recent studies linking disadvantaged urban environments with mental health and proposes a hypothetical model to help guide future research.