This narrative literature review examines key issues surrounding psychosocial disability support in the National Disability Insurance Scheme (NDIS). It highlights the NDIS's neoliberal approach to support, which has underpinned a lack of clarity around the conceptualisation of psychosocial disability and recovery. Several studies identified a mismatch between the episodic nature of mental illness and the NDIS's permanent disability criteria. Additionally, the review highlights the NDIS's inadequate consideration of social disadvantage in implementing support for individuals with psychosocial disability. Challenges in managing NDIS funding can result from both fluctuating mental health conditions and a lack of accessible information for informed decision-making regarding service options. Findings highlight that the NDIS tends to employ a neoliberal approach focused on capacity building, which may not fully capture the qualitative and individualised aspects of recovery. Systemic and socio-structural barriers within the NDIS and individual circumstances can hinder NDIS service users' decision-making. In conclusion, the review emphasises the need for a diverse range of services tailored to the specific needs of NDIS participants with psychosocial disability to support their unique recovery processes. There is a need for further research to comprehend the multifaceted recovery processes and lived experiences of NDIS participants with psychosocial disability.