Background: Existing studies tend to show a positive association between mental illness and challenging behaviour among adults with intellectual disabilities (ID). However, whether the association is direct or artefactual is less clear. The purpose was to explore the association between psychiatric status and level of challenging behaviour, while controlling for adaptive behaviour and occurrence of autistic spectrum disorders. Methods: Data were collected on the age, gender, adaptive and challenging behaviour, social impairment and psychiatric status of 312 adults with ID. Participants were divided according to psychiatric status, group equivalence in adaptive behaviour and the presence of autistic spectrum disorders achieved, and differences in challenging behaviour explored. In addition, multiple regression was used to examine the association between psychiatric status and challenging behaviour after controlling for other participant characteristics and to test whether the interaction between psychiatric status and adaptive behaviour added significantly to explanation. Results: Challenging behaviour was higher among participants meeting threshold levels on the psychiatric screen. The regression analysis confirmed the association and demonstrated an interaction between total score on the psychiatric screen and level of adaptive behaviour. This moderated effect showed the relationship between psychiatric status and challenging behaviour to be stronger at lower adaptive behaviour. Conclusions: This study reinforces previous findings that psychiatric morbidity among people with ID is associated with higher levels of challenging behaviour and supports predictions that this association is more pronounced for people with severe ID. The precise nature and causal direction of the association requires further clarification. However, the understanding of how psychiatric problems might contribute to challenging behaviour needs to be part of the clinical appreciation of such behaviour.