The authors compared 2 approaches to vocational rehabilitation for individuals with severe mental illness: the individual placement and support (IPS) model of supported employment and the diversified placement approach (DPA), which emphasizes work readiness and offers a range of vocational options, including agency-run businesses and agency-contracted placements with community employers. In all, 187 unemployed participants with severe mental illness were randomly assigned to IPS or DPA. Over 2 years, IPS had significantly better competitive employment outcomes than DPA. Competitive employment rates over the 2-year follow-up were 75.0% for IPS and 33.7% for DPA. However, IPS and DPA did not differ on paid employment outcomes. The authors conclude that IPS is more effective than DPA in achieving competitive employment, but not paid employment.