The at-risk mental state (ARMS) has been substantially researched and used as the basis for new clinical settings and strategies over the past two decades. However, it has also caused controversy and intense debate. In this Review, we assess available evidence and propose future directions. Accumulating research suggests that a blend of clinical staging and profiling, which naturally incorporates ARMS, might be a better guide for treatment of patients in different stages of psychiatric illness than the categorical DSM and ICD systems. Furthermore, clinical staging, with its emphasis on balancing risks and benefits, could help to prevent premature treatment or overtreatment with psychotropic drugs. Meta-analyses and reviews show that treatment of ARMS leads to a significant reduction in transition rate to a first psychosis. The debate about stigma associated with ARMS is based on scarce published work. The few studies that have been done suggest that stigma (including self-stigma) arises largely from negative societal views on psychiatric disorders and, depending on the setting and approach, not from engagement in treatment for ARMS per se. The evidence base suggests that definition of ARMS is an important step in implementation of clinical staging and profiling in psychiatry. However, more research across traditional diagnostic boundaries is needed to refine these clinical phenotypes and link them to biomarkers with the goal of personalised stepwise care. Health-system reform is overdue and a parallel process to support this approach is needed, which is similar to how physical forms of non-communicable disease are treated.