Facilities involved in the treatment of mental illness have existed throughout history. For instance, back in 2850 BCE, Egypt's Temple of Imhotep became a medical school that also offered sleep therapy, occupational therapies, and recreational activities for the treatment of mental disorders. Although theories of mental health were based on notions of magic and religious superstitions, and successful results attributed accordingly, the school exercised humane treatments and patients were handled respectfully.

It was some time before institutions were created to care exclusively for the mentally ill. The most significant to the development of mental institutions is the Bethlem Royal Hospital in London. This facility was founded as a religious priory in 1247, known as St. Mary of Bethlem (also spelled "Bethlehem" or "Bedlam"), and like many religious houses of the time, for years it operated a hospice. In 1375, the priory was taken over by King Edward III, and two years later began to take in "lunatics." In 1403, it began to specialize in the care of mental patients, and in 1547, King Henry VIII gave the hospital to the city of London, its charter declaring that it was dedicated exclusively to the care of the insane. By the mid-1600s, one of the early medieval variants of its name, bedlam, became a byword for a place of uproar and confusion. The hospital was virtually the only psychiatric hospital in the country for centuries.

Bridget Franklin writes that, due to the poor understanding of mental illness at the time, patients at Bedlam were considered inhuman, and were treated accordingly: shackled, whipped, kept naked on beds of straw, and fed through the bars of their cages. Furthermore, over time, the hospital became dilapidated and overcrowded, with no division between sexes or classes of illness. In 1675, it moved to Moorfields, London, into the first structure built purposely as a hospital for the insane. It was here that Bedlam became a tourist attraction, where people who paid a penny could observe and provoke "lunatics" for their own amusement. It was not until 1700 that these "lunatics" were finally called "patients."

Towards the end of the 18th century, increasing knowledge about mental health and increasing public awareness about the treatment of the mentally ill, led to municipal inquiries into the state of the London asylum. In 1808, the County Asylums Act encouraged – but did not force – the building of new asylums to alleviate the overcrowded Bedlam. The Lunacy Act of 1845 finally required that there be an asylum in every county in England.

William Tuke (1732–1822) played an important role in the development of improved asylums. Founder of the York Retreat, Tuke was actively involved in the movement for moral treatment (which advocated humane, non-violent treatment of the insane), that took place in the 19th century. Tuke believed that the mentally ill should be confined to a comfortable, relaxing atmosphere, with fresh air, kindness, and occupation, where the patient was expected to take responsibility for his or her actions. Moreover, an important belief of the moral reformers was that more attention should be paid to the causes of illnesses and differentiating between types.

As a result, as Franklin says, new hospitals were built with the goal of implementing the ideas espoused by the movement for moral treatment. That is, an asylum should not be frightening or repelling in any way, but rather should have an inviting and cheerful appearance. Rather than a prison, it should be a home for both the staff and inmates, with a recreation room, kitchen, chapel, and other such rooms in addition to wards. Regrettably, the new hospitals eventually became overcrowded, and as a result, quality of care declined. Additionally, Katherine Darton notes that Darwin's 1859 Origin of the Species led to a sense that insanity was "a hereditary incapacity," and the insane should be confined rather than cared for.

In a 2005 article, N. Brimblecombe, a lead nurse in mental health in Herfortshire, UK, discusses the conditions of the Hill End Asylum in 1903. Overcrowding and high staff turnover caused the Hill End Asylum to become place of captivity rather than treatment. By the 1950s, asylums had become a place of despair rather than hope, with terms such as "looney bin" and "nuthouse" commonly used in reference to asylums.

During the 1960s, when psychiatry became a more accepted field of medicine, new drugs began to emerge to treat mental illness. And, with a better understanding of mental health, patients no longer seemed frightening or bizarre to the public, and many patients could be accepted in the outside world. Absolute containment, therefore, was no longer always necessary, and the practice of locking a mentally ill patient away indefinitely declined.

Today, people with mental illnesses are not hospitalized unless it is absolutely necessary. Mental illness is attributed to various causes, both pathological and psychological. A patient's symptoms are evaluated thoroughly, and the treatment plan with the highest likelihood of success for those symptoms is introduced.

We have come a long way since the torturous treatments of Bedlam in the 17th century, and almost as far as the Temple of Imhotep almost 5,000 years ago!