A sizeable proportion of all suicides have mental health issues in the background. The association between access to mental health care in the community and decreased suicide rates is inconsistent in the literature. Brazil undertook a major psychiatric reform strengthening psychiatric community-based care. To evaluate the impact of the new Brazilian community mental health care units (CAPS-Psychosocial-Community-Centres) on municipal rates of suicide, and hospitalisations by attempted suicide, psychiatric and alcohol problems. We performed robust multivariable negative binomial regression models with fixed effect for panel data from all 5507 Brazilian municipalities. Suicide and hospitalization rates were calculated by sex and standardised by age for each municipality and year from 2008 to 2012. The main variable of interest was municipal CAPS coverage. CAPS municipal coverage was associated with lower suicide rates but this was not statistically significant (RR: 0.981; 95% CI 0.952-1.011). However, increased CAPS coverage was associated with lower hospitalizations for attempted suicide (RR: 0.887; 95% CI 0.841-0.935), psychiatric (RR: 0.841; 95% CI 0.821-0.862), and alcohol problems (RR: 0.882; 95% CI 0.860-0.904). Our results suggest that access to community mental health services seems to reduce hospitalisations due to attempted suicide, psychiatric and alcohol problems but not suicidal rates. Therefore, increased investments in community mental health services in low-middle-income countries might decrease costs associated with potentially avoidable hospitalizations.