Residential crowding is a widespread housing-health challenge, but floor-area and occupancy measures offer limited guidance for architectural assessment. This systematic review examined associations between residential crowding and mental-health and psychosocial outcomes, relevant environmental-psychological mechanisms, and design-oriented spatial indicators. Following PRISMA 2020, we searched four databases from inception through 3 April 2026. Seventy-six empirical studies were included; 48 formed a structured evidence matrix, and studies reporting adjusted estimates in explicit spatial units underwent additional extraction. Methodological quality was appraised using a ROBINS-E-style framework. Heterogeneity in exposure definitions, outcomes, effect metrics, and study designs precluded meta-analysis. The narrative synthesis therefore emphasized adjusted estimates, temporality, confounder control, and risk of bias rather than unweighted study counts. Greater livable area was associated with lower depression risk, higher persons-per-room ratios with greater child behavioural difficulties, and bedroom-loss-driven crowding with increased depressive symptoms. These estimates did not support a universal threshold. Privacy loss and reduced perceived control recurred most broadly. Sleep disturbance, family strain, weakened social support, and impaired sense of home were salient in particular populations and settings. The resulting Crowding-Sensitive Residential Performance Assessment integrates spatial load, regulatory capacity, and occupancy context.