Background: People with severe mental ill health are more likely to smoke than those in the general population. It is therefore important that effective smoking cessation strategies are used to help people with severe mental ill health to stop smoking. This study aims to assess the effectiveness and cost–effectiveness of smoking cessation and reduction strategies in adults with severe mental ill health in both inpatient and outpatient settings. Methods: This is an update of a previous systematic review. Electronic databases were searched during September 2016 for randomised controlled trials comparing smoking cessation interventions to each other, usual care, or placebo. Data was extracted on biochemically-verified, self-reported smoking cessation (primary outcome), as well as on smoking reduction, body weight, psychiatric symptom, and adverse events (secondary outcomes). Results: We included 26 trials of pharmacological and/or behavioural interventions. Eight trials comparing bupropion to placebo were pooled showing that bupropion improved quit rates significantly in the medium and long term but not the short term (short term RR = 6.42 95% CI 0.82–50.07; medium term RR = 2.93 95% CI 1.61–5.34; long term RR = 3.04 95% CI 1.10–8.42). Five trials comparing varenicline to placebo showed that that the addition of varenicline improved quit rates significantly in the medium term (RR = 4.13 95% CI 1.36–12.53). The results from five trials of specialised smoking cessation programmes were pooled and showed no evidence of benefit in the medium (RR = 1.32 95% CI 0.85–2.06) or long term (RR = 1.33 95% CI 0.85–2.08). There was insufficient data to allowing pooling for all time points for varenicline and trials of specialist smoking cessation programmes. Trials suggest few adverse events although safety data were not always reported. Only one pilot study reported cost effectiveness data. Conclusions: Bupropion and varenicline, which have been shown to be effective in the general population, also work for people with severe mental ill health and their use in patients with stable psychiatric conditions. Despite good evidence for the effectiveness of smoking cessation interventions for people with severe mental ill health, the percentage of people with severe mental ill health who smoke remains higher than that for the general population.