Mental capacity is an emerging ethical legal concept in psychiatric settings but its relation to clinical parameters remains uncertain. We sought to investigate the associations of regaining capacity to make treatment decisions following approximately 1 month of in-patient psychiatric treatment. We followed up 115 consecutive patients admitted to a psychiatric hospital who were judged to lack capacity to make treatment decisions at the point of hospitalization. We were primarily interested in whether the diagnosis of schizophrenia and schizoaffective disorder associated with reduced chances of regaining capacity compared with other diagnoses and whether affective symptoms on admission associated with increased chances of regaining capacity. In addition, we examined how change in insight was associated with regaining capacity in schizophrenia, bipolar affective disorder (BPAD)-mania, and depression. We found evidence that the category of 'schizophrenia or schizoaffective disorder' associated with not regaining capacity at 1 month compared with BPAD-mania [odds ratio (OR) 3.62, 95% confidence intervals (CI) 1.13-11.6] and depression (OR 5.35, 95% CI 1.47-9.55) and that affective symptoms on admission associated with regaining capacity (OR 1.23, 95% CI 1.02-1.48). In addition, using an interaction model, we found some evidence that gain in insight may not be a good indicator of regaining capacity in patients with depression compared with patients with schizophrenia and BPAD-mania. We suggest that clinico-ethical studies using mental capacity provide a way of assessing the validity of nosological and other clinical concepts in psychiatry.