Objective: This study aims to develop and validate the stigma assessment tool for family member caregivers of patients with mental illness (SAT-FAM). Methods: This study was conducted in three phases: (1) explicate the concept of stigma towards family caregivers of patients with mental illness, (2) develop and iteratively optimise a preliminary version of the SAT-FAM, and (3) test the psychometric properties of the final version of the SAT-FAM. In phase 1, 14 family caregivers of patients with mental illness were interviewed for qualitative data collection and analysis. Four themes emerged: people's reaction and attitude, compassion with fear, rejection and loneliness, and confusion about mental illness. In phase 2, the first draft of the SAT-FAM with 38 items was developed. Based on the content validity index, each item was evaluated by 15 experts using a 4-point scale (1 = not relevant; 4 = very relevant). 15 family member caregivers of patients with mental illness were randomly selected to complete the face validity form on a Likert scale ranging from 1 (strongly disagree) to 4 (strongly agree). In phase 3, 286 family caregivers of people with mental illness were recruited for exploratory factor analysis. Internal consistency (Cronbach's coefficient) and test-retest reliability were measured. Results: The final draft of the SAT-FAM comprised 30 items in four factors: shame and discrimination, social interaction, emotional reaction, and avoidance behaviours. The internal consistency (Cronbach's alpha) was >0.89 for all factors. The test-retest reliability among 30 family caregivers was good (0.76). Conclusions: The SAT-FAM is a valid and reliable self-report instrument for assessing stigma towards family caregivers of patients with mental illness. It enables a practical way of evaluating interventions aimed at reducing stigma.