Since the 1950s deinstitutionalization has taken place for people with mental illnesses in the Western world. The growth of community care and residential facilities, as well as planning and implementation of policies, has varied in timing and orientation. An appreciation of the process of change affecting people discharged to the community highlights their strength, resilience, and vulnerabilities. This paper outlines a two and a half year ethnographic qualitative study undertaken in Australia, where 47 long-stay psychiatric inpatients were discharged to the community. The process accompanied the amalgamation of two major psychiatric hospitals, resulting in the closure of one. Findings demonstrated slow but positive change for residents as they reintegrated into the community. A separate quantitative and economic study was undertaken alongside the qualitative study (for results see Hobbs, et al., 2000; Newton, et al, 2000; Lapsley, et al., 2000).