Abstract Purpose The purpose of this study was to develop and psychometrically evaluate a new quality of life measure for use in people with mental health problems—the Mental Health Quality of Life questionnaire (MHQoL). Methods The MHQoL dimensions were based on prior research by Connell and colleagues, highlighting the seven most important quality of life dimensions in the context of mental health. Items were generated following a systematic review we performed and through inviting expert opinion. A focus group and an online qualitative study (N = 120) were carried out to assess the face and content validity of the MHQoL. The MHQoL was further tested for its internal consistency, convergent validity, known-group validity and test–retest reliability among mental healthcare service users (N = 479) and members of the general population (N = 110). Results The MHQoL consists of a descriptive system (MHQoL-7D), including s items covering seven dimensions (self-image, independence, mood, relationships, daily activities, physical health, future) and a visual analogue scale of general psychological well-being (MHQoL-VAS). Internal consistency was high (Cronbach's ∝ = 0.85) and correlations between MHQoL-7D scores and related measures (EQ-5D-5L, MANSA, ICECAP-A, and BSI) supported convergent validity. The intraclass correlation coefficient of the MHQoL-7D sum score for test–retest reliability was 0.85. Known-group validity was supported by the ability to detect significant differences in MHQoL-7D levels between service users and the general population, and between groups with different levels of psychological distress. Conclusion The MHQoL demonstrated favourable psychometric properties and showed promise as a simple and effective measure to assess quality of life in people with mental health problems.