Background: The authors investigated the occurrence and 12-month outcome of mental disorders in primary care setting. Method: Out of 1555 primary care patients screened in an index period in 16 primary care clinics, 457 subjects were selected for the second phase interview with the CIDI and 250 subjects completed the assessment. Of these, 116 patients (49 ICD-IO cases and 67 subthreshold cases) completed the 12-month follow-up evaluation. Results: Overall, 12.4% of consecutive primary care attenders had a current ICD-10 disorder and 14.2% had a subthreshold mental disorder. Psychiatric comorbidity was found in 45% of the initial sample. Physicians recognized the presence of a mental disorder at baseline in 84.6% of cases with depression comorbid with anxiety and in 44.8% of subthreshold cases. Subthreshold cases outnumbered by three times threshold cases in terms of remission after one year. However, 18% of subthreshold conditions showed no improvement after 12 months. Recognition of mental disorder by the physician at baseline was not associated with an improvement of psychopathology after 12 months, but was associated with an improvement in occupational disability and self-reported disability among threshold cases. Conclusions: Mental disorders are frequent in primary care but their outcome is relatively independent from recognition by the physician. Threshold cases have a worse 12-month outcome than subthreshold cases. However, a substantial outcome variability seems to characterize different diagnostic subgroups both in threshold and subthreshold cases. (C) 1999 Elsevier Science B.V. All rights reserved.