The six-year study published in the medical journal The Lancet reported on 780 people living in south London, 410 of whom were being treated for conditions including schizophrenia and bipolar disorder.
The report's lead author was Marta Di Forti from the Institute of Psychiatry, Psychology and Neuroscience at King's College London, who warned about the growing use of "skunk" -- a powerful type of cannabis.
"Compared with those who had never tried cannabis, users of high potency skunk-like cannabis had a threefold increase in risk of psychosis," she said.
Psychosis is a mental health problem and the symptoms include hallucinations and delusions.
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In England, about one new case of psychosis is diagnosed for every 2,000 people every year.
"This paper suggests that we could prevent almost one quarter of cases of psychosis if no-one smoked high potency cannabis," said Robin Murray, professor of psychiatric research at King's College London and a senior researcher for the study.
"This could save young patients a lot of suffering and the NHS (National Health Service) a lot of money," he said.
Researchers said today that it was important for doctors to ask not just about drug use but about frequency of drug use to assess the risk.
"This gives more information about whether the user is at risk of mental health problems. Awareness needs to increase for this to happen," Di Forti said.
A Home Office spokesman said the findings confirmed the government's hardline approach, adding: "Drugs such as cannabis are illegal because scientific and medical evidence demonstrates they are harmful."