The move toward deinstitutionalization of chronic psychiatric patients has been hampered by inadequate community-based rehabilitation programs. To investigate whether psychosocial rehabilitation promotes higher levels of functioning in discharged psychiatric patients, assessments of social adjustment, recidivism, and a non-traditional measure of client demoralization were administered to 102 clients in a community psychosocial rehabilitation program. Results confirmed that a comprehensive support system, which assumes primary responsibility for patient mental health care, maintains or enhances the level of functioning in former psychiatric patients. Results showed very low recidivism rates, improved or maintained social adjustment, and a significant decrease in reported demoralization. (JAC)