OBJECTIVES: Mental illnesses in Pakistan are at rise. Decade long terrorism, suicide bombing, recent floods, political uncertainty and transition to market economy are some of the key factors that are contributing to increasing mental illnesses in the country. This study emphasizes the importance of economic consequences of mental illness in Pakistan and provides estimates of cost on mental illness in the country. METHODS: Aga Khan University Hospital patient records of psychiatry clinics inpatient (N=727) and outpatient (N=1458) data for the year 2005-06 were classified into ten ICD-10 classification. For each category of mental illness the direct cost included consultation fee, diagnostics, bed charges, laboratory charges medication and procedure. The indirect costs on travel and productivity losses are being estimated drawing a stratified random sample for both inpatient and day care dataset. RESULTS: Mental illnesses categories 2(Schizophrenia (N=227) and 3(mood/depressive disorder (N=415) accounted for 82% of burden of mental illnesses in inpatient care. While in day care 2(Schizophrenia 3(mood/depressive disorder and 4(Panic/OCD) accounted for 75 % of the burden of mental illnesses in Pakistan. Mean cost for all categories in inpatient care is Pak Rs. 21701 per treatment episode. Illnesses category 8 (anorexia) was the most costly (Mean=Rs.71687) and category 1(dementia and other organic disorders were relatively less expensive to treat (Mean=Pak Rs.1183). CONCLUSIONS: Initial findings suggest the economic burden of mental illnesses is alarmingly high and its treatment is unaffordable by many families in the country. This might result in denied or delayed care. Using country level available data on burden of mental illness the economic impact of mental illnesses in Pakistan will be estimated. We will also explain socio-economic determinates of mental illnesses.