While it is known that psychiatric illness and subclinical psychiatric illness can be very disabling, their impact on workers' productivity has been little appreciated or appropriately addressed. Complex variables are involved in fashioning an appropriate policy to ameliorate the impact of mental illness on productivity including the identification of effective treatments and potential negative effects of controlling patients' access to them. The cost-effectiveness of such treatments is considered from the differing perspectives and goals of the various stakeholders involved, including employers, insurers, and workers with psychiatric illness. Depression in workers leads to significant absenteeism, "presenteeism" (diminished capacity due to illness while still present at work), and significantly increased medical expenses in addition to the costs of psychiatric care. In addition to the specific usefulness of psychotropic medication, there are a variety of studies on the cost-effectiveness of different psychotherapeutic treatments that improve health and productivity in psychiatrically ill workers. Research indicates the usefulness of approaches including employee assistance programs, specialized cognitive-behavioral treatments, and brief and longer term psychodynamic interventions. It is clear that substance abuse disorders and especially depression and subsyndromal depression have a profound negative effect on work productivity and increases in medical visits and expenses. The current system of mental health care suffers from ignorance of the negative effects of psychiatric illness in workers, from a lack of subtle awareness of which treatments are most appropriate for which diagnoses and from the reluctance by payers to invest in them. Access to evidence-based appropriate treatment can improve the negative impact on productivity as well as workers' health. This article considers these issues and argues for a role of psychotherapy in the treatment of mental illness and substance abuse from the perspective of worker productivity.