Three questions are addressed: 1) How (un)happy are people with and without mental disorders? 2) What are the clinical characteristics associated with happiness among people with a mental disorder? 3) Does happiness predict recovery from mental disorders? A representative sample (N = 7076) of the Dutch population was interviewed at baseline and one and three years later. Mental disorders were assessed using the Composite International Diagnostic Interview. Happiness was measured using a single question on how often respondents had felt happy during the last four weeks. Of the respondents with a mental disorder 68.4% reported they had felt often happy, compared to 89.1% without a disorder. The unhappiness of people with mental disorders is associated with having a mood disorder and impaired emotional and social role functioning. Happiness enhances the changes of recovery from a mental disorder at follow-up. The implications are discussed.