Cigarette smoking is a modifiable behaviour associated with mental health. We investigated the degree of genetic overlap between smoking behaviours and psychiatric traits and disorders, and whether genetic associations exist beyond genetic influences shared with confounding variables (cannabis and alcohol use, risk-taking and insomnia). Second, we investigated the presence of causal associations between smoking initiation and psychiatric traits and disorders. We found significant genetic correlations between smoking and psychiatric disorders and adult psychotic experiences. When genetic influences on known covariates were controlled for, genetic associations between most smoking behaviours and schizophrenia and depression endured (but not with bipolar disorder or most psychotic experiences). Mendelian randomization results supported a causal role of smoking initiation on psychiatric disorders and adolescent cognitive and negative psychotic experiences, although not consistently across all sensitivity analyses. In conclusion, smoking and psychiatric disorders share genetic influences that cannot be attributed to covariates such as risk-taking, insomnia or other substance use. As such, there may be some common genetic pathways underlying smoking and psychiatric disorders. In addition, smoking may play a causal role in vulnerability for mental illness.