Objective: The present study aimed to study effects of mental illness stigma on social identity and social isolation among family caregivers of psychiatric patients. Mediating role of affiliate stigma between social isolation and social identity was assessed. Method: Cross sectional research design was carried out in which 203 male and female family caregivers of psychiatric patients were approached for data collection after their consent was taken. 22 item Affiliate stigma scale, 12 item Lubben Social Network Scale-Revised measuring social isolation and 7 item Social Identity Scale were used in the study. (Winnie __ampersandsignamp; Cheung, 2008; DeVellis, 1991; Sreiner __ampersandsignamp; Norman, 1995; Cheek __ampersandsignamp; Tropp, 2002) were administered. Results: Affiliate stigma mediates the effect of social identity and social isolation among family caregivers of psychiatric patients. All the three components of stigma, that is, affection, cognition and behavior mediates the effect of disturbed social identity and social isolation from family and friends. Conclusion: The results of present study help to understand potential barriers to psychological treatment due to stigma attached to mental illness and its cure. It also provided insight to difficulties faced by caregivers due to their association with the mentally ill person. Moreover, counselors may also benefit from this research knowing the difficulties faced by caregivers and their role in the treatment process thus, helping caregivers too and designing interventions accordingly. If caretakers to family ill are properly and thoroughly informed and educated about the illness, than they can be much more successful in the caretaking role.