Objective: A significant proportion of breast cancer patients experiences psychiatric morbidity in the first year after a breast cancer diagnosis and/or beginning of treatment. This study attempted to identify and understand the risk factors for developing such problems. Methods: A consecutive series of 87 patients, aged 40–75 years, was assessed prior to diagnosis of breast cancer and followed-up approximately 8 weeks after beginning of cancer treatment and again 9 months after first follow-up. Assessments included measures of psychiatric morbidity using the General Health Questionnaire (GHQ-12), coping style using the Mental Adjustment to Cancer (MAC) Scale, symptom attribution, beliefs about breast cancer, social support, socio-demographic and clinical variables. Results: A total of 85.1% of patients completed both follow-ups. Pre-diagnostically, 32.2% of breast cancer patients scored as a GHQ-12 ‘case.’ GHQ scores fell significantly between pre-diagnostic and both post-diagnostic assessments, especially in women who had thought they had cancer. Predictors of psychological morbidity at first follow-up included pre-diagnostic GHQ-12 score, lack of social support and feelings of ‘personal responsibility/avoidance.’ GHQ-12 ‘caseness’ at second follow-up was predicted by lack of social support alone. Conclusions: Overall, psychiatric morbidity is higher prior to, than following, a definitive diagnosis of breast cancer. Early reactions of this kind are predictive of post-treatment adjustment. However, only the presence of social support in this study seems to be associated with successful adjustment in the first year following a breast cancer diagnosis. Women at increased risk of psychological morbidity after a breast cancer diagnosis may be thus identifiable and targeted therapeutically.