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Abstract Background One of the most challenging issues faced by families of people living with bipolar disorder is stigma. This study was conducted to explain the process of stigma experience in the families of people living with bipolar disorder using the grounded theory method. Methods Data for this study were collected through semi-structured interviews with participants in Razi Psychiatric Hospital in Tehran, Iran, via purposive sampling and field notetaking. The dependability, conformability, and transferability measures were included to support the data accuracy and robustness, and MAXQDA 2020 software was used to facilitate data coding. The Strauss–Corbin method was used to analyse the data. Results A total of 20 family members of people living with bipolar disorder, four people living with bipolar disorder, and three mental health professionals participated in this study. The analysis of participants’ experiences led to identifying 64 subcategories, 21 categories, and six main concepts, including social deprivation, being labelled, cultural deficiency and lack of awareness, economic challenges, forced acceptance of the existing situation, and social isolation. Conclusion Families of people living with bipolar disorder experience social deprivation, social isolation, and social rejection, which have irreparable consequences for them. Overcoming stigma in these families should be a priority of policymakers and planners in the field of psychosocial health.