This term is used to describe people who are diagnosed as having problematic drug use and a serious mental illness, particularly a psychotic disorder such as schizophrenia. This might involve a primary diagnosis of serious mental illness with a subsequent diagnosis of drug use which might have particularly adverse effects due to the mental illness. An example could be someone who has schizophrenia which is made worse by them smoking cannabis. Dual diagnosis may also involve a primary diagnosis of drug dependence which leads to, or contributes to, mental health problems. This sometimes happens with chronic users of stimulants such as amphetamine, cocaine and crack cocaine.

Making an accurate diagnosis can be difficult because mental health problems may result in similar behaviours to when someone is intoxicated or withdrawing from dependent drug use. Examples have been given of people rapidly diagnosed as being schizophrenic without considering the role of drugs and alcohol. A period of 3 to 6 weeks of abstinence from drug use may be needed to know what is happening.