Marginality or informal settlement is an important subject in urban issues that generates negative and destructive consequences for the mental health of those who reside in such areas. It is of such significance that is addressed in macro-policies of the Fifth Development Plan of Iran. Given the importance of marginality as a concerning issue, this paper explores the relationship between social capital and mental health of the inhabitants of marginalised areas of the city of Kermanshah using field method and survey technique. The statistical society includes all inhabitants of marginalised areas of Kermanshah city aged 18 years and older. A total of 384 individuals were examined as the sample using the Cochran formula. Results indicate that there are significant and positive relationships between the total social capital (P=0.34) and its various aspects, including social trust (P=0.40), social solidarity (P=0.32), social participation (P=0.37), social support (P=0.30) and social awareness (P=0.24), with mental health. Results from AMOS show that, in general, the effect of social capital as a dependent variable on the mental health of the youth living in the marginalised area is 0.48. Social capital is a main source of mental health among people living in marginal areas. A society that is rich in social capital can provide people with higher levels of social and health benefits by providing more social support for members, developing social participation and trust, and raising individual and social awareness.