This study aimed to estimate the prevalence and determinants of mental disorders (MDs) among elderly people residing in nursing homes (NHs) and those living with their families (WF) in Baghdad, Iraq, 2017. A cross-sectional study was conducted on all elderly individuals residing in all NHs in Baghdad and an equal number of elderly people residing WF. MDs were defined based on Kessler Psychological Distress Scale (K10). We used relevant World Health Organization–accredited tools to identify the types of MDs. The prevalence of MDs among elderly people was 38.7%, being statistically significantly ( P < .01) higher among those in NH (55.8%) compared with those living WF (21.5%). The proportion of types of MDs among NH versus WF residents was as follows: depression (35.4% vs 16.6%), anxiety (32.6% vs 9.9%), dementia (19.3% vs 5%), and suicide thoughts (25.4% vs 4.4%). The multivariate analysis showed many factors that were associated with MD. Low income, dependency on others, and being neglected were stronger determinant of MD among elderly people living WF. However, chronic joint pain, visual impairment, auditory impairment, and economic status deterioration were stronger determinant among those in NHs. The prevalence of MDs in the NH is more than double the prevalence in the community. We recommended enhancing elderly mental health care services including curative, preventive, and promotive activities.