BACKGROUND: Findings from efficacy trials of group psychoeducation (PE) for bipolar disorders (BD) led to its inclusion in evidence-based guidelines as a first-line mandatory treatment. However, pragmatic trials and observational studies are needed to determine its real-world effectiveness, impact on outcomes deemed important to patients and to clarify potential mediators of any benefits. METHODS: Individuals with BD were offered the opportunity to participate in 20h of PE and asked to complete pre- and post-intervention ratings of symptoms, knowledge about BD, medication adherence, and illness perception. A priori, two key patient outcomes were identified (social functioning and self-esteem); sample attrition due to dropout or relapse was recorded. RESULTS: Of 156 individuals who completed the pre-PE assessments, 103 completed the program and post-PE assessments. Only 4 of 53 dropouts were associated with BD relapse. Post-intervention, the PE completers demonstrated a statistically significant improvement in social functioning (p = 0.003, Effect Size (ES) = 0.26) and a trend towards improved self-esteem (ES = 0.14). Whilst there were significant changes in medication adherence (p = 0.002, ES = 0.28), knowledge of BD (p < 0.001, ES = 1.20), and illness perception (p < 0.001, ES = -0.37), mediational analysis demonstrated that only change in illness perception was associated to change in functioning (p=0.03) with no contribution from changes in knowledge of BD or medication adherence. CONCLUSIONS: In real-world settings, over 60% individuals completed 10-session course of PE. After controlling for demography and baseline clinical state, change in illness perception, rather than change in knowledge or medication adherence, emerged as a potential mediator of some benefits of PE.