The study aimed to understand the nature and context of mental health stigma among people living with a mental health condition and the subsequent effect on their caregivers. Semi-structured qualitative face to face interviews were conducted by trained mental healthcare professionals with mental health service users (n = 26) and caregivers (n = 24) in private rooms at a tertiary health facility, where service users were admitted. Following transcription and translation, data was analysed using framework analysis. There was limited knowledge about their mental health diagnosis by service users and generally low mental health literacy among service users and caregivers. Mental health service users reported experiences of stigma from their own families and communities. Caregivers reported withholding the patient’s diagnosis from the community for fear of being stigmatised, and this fear of stigma carries the risk of negatively affecting care treatment-seeking. Limited mental health knowledge, coupled with a high prevalence of perceived family and community stigma among caregivers and service users, impedes the capacity of caregivers to effectively cope in supporting their family members living with mental illness. There is a need for interventions to provide psychoeducation, reduce community stigma, and support coping strategies for caregivers and people with mental health conditions.