Summary Background Psychiatric co‐morbidity, in particular major depression and anxiety, is common in patients with Crohn's disease (CD) and ulcerative colitis (UC). Prior studies examining this may be confounded by the co‐existence of functional bowel symptoms. Limited data exist examining an association between depression or anxiety and disease‐specific endpoints such as bowel surgery. Aims To examine the frequency of depression and anxiety (prior to surgery or hospitalisation) in a large multi‐institution electronic medical record (EMR)‐based cohort of CD and UC patients; to define the independent effect of psychiatric co‐morbidity on risk of subsequent surgery or hospitalisation in CD and UC, and to identify the effects of depression and anxiety on healthcare utilisation in our cohort. Methods Using a multi‐institution cohort of patients with CD and UC, we identified those who also had co‐existing psychiatric co‐morbidity (major depressive disorder or generalised anxiety). After excluding those diagnosed with such co‐morbidity for the first time following surgery, we used multivariate logistic regression to examine the independent effect of psychiatric co‐morbidity on IBD‐related surgery and hospitalisation. To account for confounding by disease severity, we adjusted for a propensity score estimating likelihood of psychiatric co‐morbidity influenced by severity of disease in our models. Results A total of 5405 CD and 5429 UC patients were included in this study; one‐fifth had either major depressive disorder or generalised anxiety. In multivariate analysis, adjusting for potential confounders and the propensity score, presence of mood or anxiety co‐morbidity was associated with a 28% increase in risk of surgery in CD (OR: 1.28, 95% CI: 1.03–1.57), but not UC (OR: 1.01, 95% CI: 0.80–1.28). Psychiatric co‐morbidity was associated with increased healthcare utilisation. Conclusions Depressive disorder or generalised anxiety is associated with a modestly increased risk of surgery in patients with Crohn's disease. Interventions addressing this may improve patient outcomes.