BACKGROUND Violence and other traumatic events, as well as psychiatric disorders are frequent in developing countries, but there are few population studies to show the actual impact of traumatic events in the psychiatric morbidity in low and middle-income countries (LMIC). AIMS To study the relationship between traumatic events and prevalence of mental disorders in São Paulo and Rio de Janeiro, Brazil. METHODS Cross-sectional survey carried out in 2007-2008 with a probabilistic representative sample of 15- to 75-year-old residents in Sao Paulo and Rio de Janeiro, Brazil, using the Composite International Diagnostic Interview. RESULTS The sample comprised 3744 interviews. Nearly 90% of participants faced lifetime traumatic events. Lifetime prevalence of any disorders was 44% in Sao Paulo and 42.1% in Rio de Janeiro. One-year estimates were 32.5% and 31.2%. One-year prevalence of traumatic events was higher in Rio de Janeiro than Sao Paulo (35.1 vs. 21.7; p<0.001). Participants from Rio de Janeiro were less likely to have alcohol dependence (OR = 0.55; p = 0.027), depression (OR = 0.6; p = 0.006) generalized anxiety (OR = 0.59; p = 0.021) and post-traumatic stress disorder (OR = 0.62; p = 0.027). Traumatic events correlated with all diagnoses--e.g. assaultive violence with alcohol dependence (OR = 5.7; p<0.001) and with depression (OR = 1.7; p = 0.001). CONCLUSION Our findings show that psychiatric disorders and traumatic events, especially violence, are extremely common in Sao Paulo and Rio de Janeiro, supporting the idea that neuropsychiatric disorders and external causes have become a major public health priority, as they are amongst the leading causes of burden of disease in low and middle-income countries. The comparison between the two cities regarding patterns of violence and psychiatric morbidity suggests that environmental factors may buffer the negative impacts of traumatic events. Identifying such factors might guide the implementation of interventions to improve mental health and quality of life in LMIC urban centers.