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Dignity is widely recognized as a foundational concept in the provision of healthcare. Despite this, concepts of dignity are only vaguely described in the literature relating to mental health services, contributing to frequent violations of service users’ dignity. Notably, discussions of dignity in mental health services often do not include the service user perspective. We offer a narrative review of the literature to examine how service users and peer workers articulate the co-production of dignity within mental health services. Seven overarching dimensions of dignity emerge from the available evidence, spanning the social dignity that service users experience in relation with healthcare professionals, the mental health system itself, the physical settings in which mental health services are delivered, and the use of peers as valued members of the mental health workforce and co-creators of knowledge. To ensure that mental health service users are empowered by the mental healthcare they receive, it is imperative that concepts of dignity move beyond ‘vague’ moral and ethical concepts to operational guidelines for best practice in mental health service design and delivery which are grounded in service user perspectives. To this end, we make meaningful recommendations to improve how healthcare professionals are trained, to implement alternatives to coercion in mental healthcare and to explore how lived experience can be centered in mental health services, and we call for the recognition of service users as experts by experience in peer work and the co-creation of new knowledge and evidence.