Something needs to be fixed and it looks like the wall.

There is little you can do to fix the problem as is, since the door casing is rounded over. That means even a good edge to edge filler strip will not work.

Best way to make the repair is to remove the sheetrock causing the problem and find out why the sheetrock is installed that way. Then install new sheetrock to allow trimming the door casing properly.

I assumed the wall was off level a little, so when they installed the door frame this happened. I noticed that the sheetock is separated a little from the stud behind it, but not enough to explain the large gap. I thought maybe I could find 3/8" sheetrock, but I don't know if such a thing is made.

Also, this door marks the transition from new construction to old. So what little of what I can see behind the sheetrock doesn't look like a regular stud.

The width of the jamb is supposed to be equal to the width of the wall including the drywall. Is the wall plumb? Is the jamb plumb? Is the other side of the jamb flush with the wall? Are the trimmer studs centered and plumb? They all should be plumb and square and you most likely need a wider jamb. You need to get the basics right.

So what little of what I can see behind the sheetrock doesn't look like a regular stud.

As Someone said, the door jamb should be the same width as the framing plus drywall and everything needs to be plumb. Now if this is existing framing it's possible that things are pretty far out of whack. It's also possible, depending on the age of the house, that you don't have 3 1/2" deep studs. If this is a standard, prehung door -- you've got problems.

The solution is to rip out the jamb and use a wider one, scribing it to fit.

Thanks for the replies. The older framing is 3 1/2". I checked the jamb with a level and it is plumb. The wall is off a little, which is causing the problem. I have about 10 other interior doors installed and they're all OK. This is the only one that is a problem.

This door was installed at least 6 months ago and the other side of the door is fine and was trimmed already by a contractor. They never did the other side that I'm looking at. I'm not in a position right now to rip the door out and redo everything. What about my thought above about cutting out the sheetrock and shimming the trim directly to the stud, essentially replacing the sheetrock with the trim?

If I rip out the sheetrock maybe I'll find something obvious like a couple of nails sticking out. If not, I can do what I mentioned above. Any reason not to do this?