Negative effects of psychotherapy (NEP) include side effects, malpractice, and unethical behavior. Its setting-specific frequencies and predictors are mostly unknown. The two presented studies aim to investigate NEP and its predictors systematically across different treatment settings. In study 1, N = 197 patients of a German outpatient center were recruited, on average, 3.76 years after the termination of psychotherapy. In study 2, data from N = 118 patients of two German inpatient clinics were collected at admission (t0), discharge (t1), and 9-month follow-up (t2). All participants evaluated the negative effects of their previous out- or inpatient psychotherapy with the Inventory for the Balanced Assessment of Negative Effects in Psychotherapy and a priori hypothesized predictors. At least one side effect was reported by 37.3% of inpatients (t2) and 15.2% of outpatients. At least one case of malpractice and unethical behavior was reported by 28.8% of inpatients (t2) and 7.1% of outpatients. Inpatients reported significantly more side effects (U = 14347, z = 4.70, p < 0.001, r = 0.26) and malpractice and unethical behavior (U = 14168, z = 5.21, p < 0.001, r = 0.29) than outpatients. Rates of severe malpractice in the form of breaking confidentiality and physical and sexual abuse were less than 1% in both settings. Predictors of side effects were prior experience with psychotherapy and current interpersonal difficulties in the outpatient setting and higher motivation for psychotherapy (t0) in the inpatient setting. Predictors of malpractice and unethical behavior were younger age in the outpatient setting and poor therapeutic alliance, prior negative experience with malpractice and unethical behavior, and higher outcome expectations in the inpatient setting. NEP are common in both, in- and outpatient settings. Inpatients are at higher risk for the NEP than outpatients. To safeguard patients’ wellbeing, the systematic assessment and distinction of side effects and malpractice and unethical behavior should gain more attention in research and clinical practice.