Objective Home care of advanced cancer patients often has adverse effects on physical and mental health of family caregivers. Little is known about the long‐term effects of continuous caregiving on mental health as compared with the effects of bereavement. The objectives of this study were to describe the course of psychiatric morbidity in family caregivers over time, to identify the impact of the patients' death on caregivers, and to explore possible predictor variables for psychiatric morbidity. Methods This multi‐institutional, prospective study included 80 family caregivers of 80 advanced cancer patients for baseline and 9 months follow‐up assessment. Possible psychiatric disorders (ie, depression, anxiety, posttraumatic stress disorder, and alcohol abuse/dependence) as well as potentially predictive factors (ie, sociodemographic factors, burden, hope, and coping mechanisms) were assessed. Results Follow‐up assessment was conducted on average 9.2 months (±2.9) after baseline assessment. Prevalence rates of anxiety and posttraumatic stress disorder decreased significantly over time, whereas depression and alcoholism remained stable. Bereavement was experienced by 53% of caregivers in the follow‐up period. The patients' death had no influence on psychiatric morbidity at follow‐up. Predictors for the development of a psychiatric disorder varied according to condition, with hope and emotion‐oriented coping identified as important influences, especially for anxiety and depression. Conclusion Family caregivers with certain psychiatric disorders might need targeted psychosocial support to ensure their mental well‐being and prevent long‐term disability. Supporting hope and functional coping strategies early after the patient's diagnosis might limit development and extent of psychiatric morbidity.