Background: People born in densely populated areas have a higher risk of developing schizophrenia, bipolar disorder and autism. Aims: The purpose of this study was to investigate whether urban-rural differences in place of birth influence a broad range of mental disorders. Method: Population-based cohort study of everyone born in Denmark between 1955 and 2006 (n = 2 894 640). Main outcome measures were incidence rate ratios for five levels of urbanisation and summary estimates contrasting birth in the capital with birth in rural areas. Results: For all psychiatric disorders, except intellectual disability (ICD-10 'mental retardation') and behavioural and emotional disorders with onset in childhood, people born in the capital had a higher incidence than people born in rural areas. Conclusions: Birth in an urban environment is associated with an increased risk for mental illness in general and for a broad range of specific psychiatric disorders. Given this new evidence that urban-rural differences in incidence are not confined to the well-studied psychotic disorders, further work is needed to identify the underlying aetiopathogenic mechanisms.