Cultural context shapes how religion and spirituality are understood in relation to mental health and incorporated into clinical care. This review critically compares the interplay between religion, spirituality, and mental health in Western (primarily North American and European) and Chinese contexts. Synthesizing English-language literature with a chronological analysis of Chinese-language studies, it examines how cultural, philosophical, and sociopolitical factors shape understandings of belief and mental illness, particularly psychosis, where spiritual experiences may overlap with symptoms. Western paradigms emphasize duality, viewing faith as either a coping resource or a risk, and have developed professionalized spiritual care through hospital chaplaincy and biopsychosocial-spiritual models. In contrast, Chinese research has evolved from portraying “superstition” as a barrier to psychiatric treatment in the 1990s to recognizing spirituality amid modernization. Influenced by diffuse forms of religious life and traditions such as Confucianism, Daoism, and Buddhism, and holistic concepts such as Shen in traditional Chinese medicine, early Chinese research emphasized family- and community-oriented help-seeking and external behavioral factors. Comparative analysis reveals shared quests for meaning, hope, and connection, alongside differences in institutional versus diffuse religion, individual versus collective orientations, internal processes versus external barriers, and culturally shaped experiences. The review advocates culturally syntonic spiritual care in China through thoughtful localization of Western models. Recommendations include clinician training in cultural humility, integration of indigenous approaches such as Chinese Traditional Culture Therapy and Buddhist/Daoist mindfulness, family-inclusive interventions, and policy, institutional, and clinical integration. Future research should empirically evaluate culturally adapted interventions for Chinese populations.