Cultural competence is crucial for achieving health equity in mental health care, as systemic barriers and sociocultural factors significantly impact access, diagnosis, and treatment. This paper examines cultural competence and related concepts, including cultural humility, cultural safety, and structural competence, while addressing critiques and misconceptions. We examine its applications at micro, meso, and macro levels, emphasizing its role in diverse clinical settings. In mental health assessment, frameworks like the Diagnostic and Statistical Manual of Mental Disorders, Fifth Edition, Text Revision's (DSM-5-TR) Outline for Cultural Formulation and the Contextual Formulation highlight the importance of understanding patients' cultural identities and values. In psychotherapy, cultural adaptations, including mindfulness-based interventions such as acceptance and commitment therapy (ACT), can enhance effectiveness. At the systemic level, we advocate for inclusive organizational practices, ongoing training, and policies that address structural inequities. Integrating cultural competence into mental health care enables clinicians and institutions to better serve diverse populations.