Australian mental health policy now clearly articulates that consumer and carer (informal caregiver) participation in all aspects of service delivery is an expectation. As the largest professional group, nurses clearly play a key role in translating policy into practice. The aim of this article is to briefly overview the history of mental health service development in Victoria, with specific emphasis on the development of psychiatric nursing. Changing perspectives of consumers of mental health services and their informal carers is discussed. Policy development is described in the context of the development of mental health services. It is argued that an appreciation of the history of punishment and confinement is necessary for providing a climate conducive to consumer and carer participation.