--- - |2 ABSTRACT Research on Mother–Baby Units (MBUs) has mainly focused on maternal psychiatric outcomes, not the well‐being of infants. This study investigated infant development and mental health along with maternal characteristics and the mother–infant relationship in 45 dyads (60% New Zealand European, 20% Māori, 11% Pacific) admitted to a new MBU. Maternal psychopathology was measured with the Health of the Nations Outcome Scale (HoNOS, J.K Wing et al., ) and Global Assessment of Functioning (GAF; I.M. Aas, ). The Parent–Infant Relationship Global Assessment Scale (PIR‐GAS, Zero to Three, ) measured the mother–infant relationship. Infant measures included Diagnostic Classification of Mental Health and Developmental Disorders of Infancy and Early Childhood (Zero to Three Press, ) and the Ages & Stages‐3 (J. Squires, E. Twombly, D. Bricker, & L. Potter, ). Maternal mental illness and functioning improved during the admission and were positively associated with longer inpatient duration and no illicit substance use. Well‐being of the infants was concerning. In addition to lower birth weights and poorer health status, at discharge 51% were lagging behind developmentally, and 51% were exhibiting signs of infant mental health concerns. Relationally, 67% of mother–infant dyads had features of, and 29% met criteria for, a disordered relationship. Poorer mother–infant relationships were associated with a maternal diagnosis of schizophrenia or bipolar disorder, use of the Mental Health Act, leaving the MBU early, limited social support, and infant mental health diagnosis. - Infant Mental Health Journal, EarlyView.