Abstract Background Black, Asian and minority ethnicity groups may experience better health outcomes when living in areas of high own-group ethnic density – the so-called ‘ethnic density’ hypothesis. We tested this hypothesis for the treatment outcome of compulsory admission. Methods Data from the 2010–2011 Mental Health Minimum Dataset (N = 1 053 617) was linked to the 2011 Census and 2010 Index of Multiple Deprivation. Own-group ethnic density was calculated by dividing the number of residents per ethnic group for each lower layer super output area (LSOA) in the Census by the LSOA total population. Multilevel modelling estimated the effect of own-group ethnic density on the risk of compulsory admission by ethnic group (White British, White other, Black, Asian and mixed), accounting for patient characteristics (age and gender), area-level deprivation and population density. Results Asian and White British patients experienced a reduced risk of compulsory admission when living in the areas of high own-group ethnic density [odds ratios (OR) 0.97, 95% credible interval (CI) 0.95–0.99 and 0.94, 95% CI 0.93–0.95, respectively], whereas White minority patients were at increased risk when living in neighbourhoods of higher own-group ethnic concentration (OR 1.18, 95% CI 1.11–1.26). Higher levels of own-group ethnic density were associated with an increased risk of compulsory admission for mixed-ethnicity patients, but only when deprivation and population density were excluded from the model. Neighbourhood-level concentration of own-group ethnicity for Black patients did not influence the risk of compulsory admission. Conclusions We found only minimal support for the ethnic density hypothesis for the treatment outcome of compulsory admission to under the Mental Health Act.