The inception and evolution of CAN MH Lanka can be traced back to the acknowledgment of the challenges faced by persons with psychosocial disabilities, as highlighted in the World Health Report of 2001. The report emphasized the correlation between psychosocial disabilities, poverty, and social exclusion. In response to these challenges, VSO Sri Lanka organized a stakeholder workshop in 2004 to address the social marginalization of persons with psychosocial disabilities. 

The workshop identified key factors contributing to social marginalization, including society's lack of awareness about psychosocial disabilities, poor access to mental health services, and economic barriers leading to social disadvantages. The first organization of persons with psychosocial disabilities (DPO) emerged as an outcome of BasicNeeds Sri Lanka's Community Mental Health and Development program, implemented on a pilot basis from 2002 to 2007 in collaboration with the government and other stakeholders. 

Subsequently, mental health professionals, services, and NGOs across the country formed DPOs for persons with psychosocial disabilities. These groups aimed to enhance the capacity of persons with psychosocial disabilities and carers for improved rehabilitation and continuous treatment. BasicNeeds, VSO, and WHO, in collaboration with the Mental Health Directorate of the Ministry of Health, implemented a comprehensive institutional strengthening program from 2007 to 2017, covering approximately 30 DPOs nationwide. 

On 08th of January 2013, the Consumer Action Network Mental Health Lanka, known as CAN MH Lanka, was established. This network aimed to empower persons with psychosocial disabilities and raise awareness about mental health within the community by networking DPOs throughout the country. 

Challenges Faced by persons with psychosocial disabilities by 2013:

1. Stigma, mistrust, and rights violations due to poor knowledge about mental health.
2. Limited support from the government and private sector for education and employment.
3. Lack of opportunities for rehabilitation and limited availability of professionals in the sector.
4. Economic barriers hindering investment in treatment and self-employment.