Objective: The purpose of the study was to determine whether use of inpatient services at a state hospital was reduced by implementation of an assertive community treatment program among persons in one of the hospital's catchement areas who were at high risk for rehospitalization. Methods: Bedday utilization by program participants during the fiscal year before the program was implemented ( 1986) and three subsequent fiscal years was compared with utilization by persons in catchment areas not served by the program. For the 66 program participants, hospital use during the year before program intake was compared with use in the year after intake using t tests. Results: Utilization of bed-days by persons in the program's catchment area was reduced by 28 percent in the third fiscal year after program implementation, compared with an increase of 15 percent among persons in the hospital's other catchment areas. in the year after the program was implemented, participants were hospitalized a mean of 27.7 days, compared with a mean of 80 days in the year before the program. Conclusions: The assertive community treatment program significantly reduced use of inpatient days and improved continuity of care.