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In 1981 Spain had an outbreak of a previously unknown disease. It became known as ‘toxic oil syndrome’ and it not only caused many deaths but also involved an alarming range of symptoms, with many patients suffering from mental problems, which left many of the victims disabled. Toxic oil syndrome, which occurred during the difficult transition from dictatorship to democracy, highlighted the inability of the Spanish health care system to deal with the myriad problems posed by the epidemic. The aim of this paper is illustrate how the epidemic was a catalyst in helping to bring about the transformation of psychiatric care in Spain. The toxic oil syndrome made it possible to try out new approaches to mental health which were being propounded by many psychiatrists. In fact, some of the methods adopted to deal with those affected by toxic oil syndrome also became mainstays of the so-called ‘psychiatric reform’ in Spain.