Background: Environmental quality is what represents the environment and helps it to be perceived. As one of the most critical and fundamental implications of quality of life, Environmental quality embraces welfare and well-being feelings, comfort, and individuals' satisfaction of spatial-physical, socio-economical, environmental, and symbolic factors. Health, as a complex structure, can contribute to the adaptation of an individual to its surroundings. Hence, mental health depends on having a positive sense of well-being, successful adaptation and appropriate and desirable behaviors of the surrounding environment, which are influenced by the environmental quality. Objectives: The current study aims to extract the effective components in the creation of a high-quality residential area as well as study the relationship between the physical environment and mental health of residents. Methodology: Two questionnaires of mental health (28GHQ) and researcher-made questionnaire are used to evaluate the role of environmental quality in improving mental health. Residents of the Sang-e-Siyah neighborhood of Shiraz were considered as the statistical society, and the sample size was estimated using Cochran formula. Cronbach's alpha coefficient determined the reliability of the questionnaire, and statistical data analysis was conducted by SPSS and LISREL software. Results: Results indicate that environmental quality improvement per unit contributes to the increase of mental health by 0. 91. Also, there is a significant relationship between the quality of the physical environment and social capital (social cohesion, trust, and security), green space, access to services, landscape (continuity and adaptability), form and function (diversity and vitality) components at 99 and 95% confidence levels. Social cohesion has the highest correlation with environmental quality. Conclusion: Social cohesion and trust in the neighborhood can have a more significant impact on mental health promotion. Finally, suggestions are provided in the contexts of physical, social-cultural, meaningfulness and readability, flexibility and eventfulness, socializability, vitality and diversity, memory, and security to improve the status quo,