The study assessed one-year outcomes for 110 clients with serious mental illness who were randomly assigned to an assertive community rehabilitation program that provides psychiatric rehabilitation services in community settings or to hospital-based rehabilitation programs. Key elements of the community program include a multidisciplinary team on call 24 hours a day, in vivo treatment, and instruction and assistance in basic living skills. Data from client interviews after one year of service were used to assess clients' quality of life, satisfaction with services, and psychopathology. Clients in the assertive community rehabilitation program were more likely to be maintained in community settings and reported better quality of life than clients in the hospital-based programs.