Objectives. We examined whether residence in neighborhoods with high levels of incarceration is associated with psychiatric morbidity among nonincarcerated community members. Methods. We linked zip code-linked information on neighborhood prison admissions rates to individual-level data on mental health from the Detroit Neighborhood Health Study (2008-2012), a prospective probability sample of predominantly Black individuals. Results. Controlling for individual- and neighborhood-level risk factors, individuals living in neighborhoods with high prison admission rates were more likely to meet criteria for a current (odds ratio [OR] = 2.9; 95% confidence interval [CI] = 1.7, 5.5) and lifetime (OR = 2.5; 95% CI = 1.4, 4.6) major depressive disorder across the 3 waves of follow-up as well as current (OR = 2.1; 95% CI = 1.0, 4.2) and lifetime (OR = 2.3; 95% CI = 1.2, 4.5) generalized anxiety disorder than were individuals living in neighborhoods with low prison admission rates. These relationships between neighborhood-level incarceration and mental health were comparable for individuals with and without a personal history of incarceration. Conclusions. Incarceration may exert collateral damage on the mental health of individuals living in high-incarceration neighborhoods, suggesting that the public mental health impact of mass incarceration extends beyond those who are incarcerated.