Mental health has always been the Cinderella of health concerns in developing countries. This paper presents evidence that mental health is in fact a central component of health problems arising out of inequality and it contributes to the perpetuation of inequality in developing countries. Divided into three parts, the first section presents evidence to justify that mental illness is a serious public health issue in developing countries. The second section presents evidence to demonstrate that there is a relationship between impoverishment and mental health. The final section considers various hypotheses on the potential explanations for this relationship and discusses their public health implications. Overall, it is noted that depression and other mental illnesses are associated with profound disability independent of any co-existing physical illness. Thus, those who are already vulnerable due to their economic circumstances are at risk of becoming ill with a disorder which will further disable them and render them less able to cope with the adverse circumstances that they already face.