A priority for psychiatric rehabilitation workers in China is to develop less-restrictive methods for managing the estimated 2500 chronically institutionalised patients who are symptomatically stable and have adequate psychosocial functioning but have no family members who are able or willing to take them home. We transferred 45 chronic schizophrenic male in-patients to an open-door rehabilitation ward where they were given as much freedom as possible and encouraged to take part in occupational, social, and recreational activities. The Nurses Observation Scale for Inpatient Evaluation (NOSIE) was used to compare the psychosocial functioning of the 43 patients who completed the year-long trial with that of 43 similar patients who received standard in-patient treatment on a locked ward. Over the year, the experimental group showed a significant improvement in overall functioning, whereas the control group showed no improvement. These findings suggest that open-door rehabilitation wards situated within the hospital can mobilise latent psychosocial functioning and may be a good method for re-introducing chronic schizophrenic patients in China back into the community.