Aim: Mental illnesses have many distinctive features such as their fluctuating nature, invisibility and lack of diagnostic clarity that make determining eligibility for disability income support challenging. How do policy-makers deal with these features when designing disability income support? More specifically, ‘How do mental illnesses come to be considered eligible disabilities?’, ‘What tools are used to assess mental illness for eligibility?’, ‘What challenges exist in this process?’ and ‘What approaches are used to address these challenges?’ We aimed to determine what evidence is available to policy-makers in Australia and Ontario (Canada) to answer these questions. Methods: Ten electronic databases and grey literature in both jurisdictions were searched using key words including disability income support, disability pension, mental illness, mental disability, addiction, depression and schizophrenia for articles published between 1991 and June 2013 yielding 1,341 articles of which 20 met the inclusion criteria and were critically appraised. Results: Results revealed that there is limited evidence available on disability income support design and mental illness in the Australian and Ontarian setting. Most of the evidence available is from the grey literature and draws on evidence from case law. Many documents reviewed argued that current policy in Australia and Ontario is frequently based on negative assumptions about mental illnesses rather than available evidence (either peer-reviewed or grey literature). Results showed that problems related to mental illness are largely related to the interpretation of the definition rather than the definition itself. Conclusions: The review confirmed that mental illnesses present many challenges when designing disability income support and that academic as well as grey literature, especially case law, provide insight into these challenges. More research is needed on addressing these challenges identified, particularly in these contexts, with the intention that more evidence on this topic could lead to policies for those with mental illness that are well-informed and do not reinforce societal prejudices