BACKGROUND: Community mental health teams (CMHTs) are the established model for supporting patients with serious mental illness in the community. However, up to 25% of those with psychotic disorders are managed solely by primary care teams. Effective management depends upon locally negotiated referral and shared care arrangements between CMHTs and primary care. AIM: To examine whether the style of working relationship between general practices and CMHTs affects the numbers and types of referrals from general practices to CMHTs, taking into account population and practice factors and provision of other mental health services which may influence referral rates. DESIGN OF STUDY: Cross-sectional study. SETTING: All 161 general practices in East London and the City Health Authority. METHOD: Questionnaire survey to all general practices to identify style of relationship. Collection of routinely available referral data to all statutory mental health services over a two-year period. Main outcome measures were number and types of referrals from general practices to CMHTs. RESULTS: The average annual referral rate to the eleven CMHTs in east London is 10 per 1000 adult population annually. The teams show a sixfold variation in rates of referral from all sources. Where good working relationships (a consultation-liaison style) exist between CMHTs and general practice, there are greater numbers of referrals requiring both long and short-term work by CMHTs. Two-stage multivariate models explained 47% of the referral variation between practices. Where primary care-based psychologists work with practices there are greater numbers of CMHT referrals, but less use of psychiatric services. CONCLUSION: Shifting to a consultation-liaison relationship should increase rates of referral of patients with serious mental illness, including those who can most benefit from the skills of CMHTs. Increasing the provision of primary care-based psychology might improve practice use of mental health services, reducing avoidable outpatient psychiatric referrals.