OBJECTIVE: To determine the prevalence of anxiety and depression in general practice patients and assess management of these conditions by general practitioners (GPs). METHOD: A random sample of 212 GPs were approached to be interviewed and to conduct a patient survey and audit on 50 consecutive patient consultations during 1993. PARTICIPANTS: 117 GPs (55% response rate) and 4867 patients (85%) who completed questionnaires suitable for analysis. SETTING: General practices in two areas (divisions of general practice) in Sydney, New South Wales. RESULTS: Thirty-six per cent of patients had abnormal scores on a General Health Questionnaire (GHQ-12); they were more likely to be women or to be unemployed. Twenty per cent of these patients had been treated for depression or anxiety in the previous 12 months; 52% were prescribed drug therapy, and were more likely to be older, male or unemployed. Seventy per cent of patients reported having been offered therapy by their GP that did not involve drugs. Twenty-four per cent had been referred to another health professional; they were more likely to be younger, or men, or patients attending their usual doctor. CONCLUSIONS: A brief screening instrument may improve GPs' detection rate of patients with anxiety or depression. The high prevalence of these conditions in unemployed people deserves particular attention by GPs. Both drug and non-drug therapies are being more appropriately applied in general practice than previously.