OBJECTIVE: The study examined patterns of mental health service use among 112 formerly homeless mentally ill adults to determine whether clients in a staffed group living situation would need fewer types of services or lesser amounts of some services than those living independently in single apartments. METHODS: Clients in the Boston McKinney demonstration project were randomly assigned to two housing types: individual apartments or a group living situation designed to teach residents to manage the house and their own affairs with minimal staff presence. The types and amounts of services these clients used during an 18-month period were documented and compared. RESULTS: Service use by all clients was heavy, especially use of inpatient psychiatric services. It did not differ by housing type. The large majority of clients in both housing types were able to remain housed and avoid homelessness. Clients who did not stay in assigned housing for the duration of the study had higher levels of inpatient service use, including detoxification and substance abuse treatment. CONCLUSIONS: When homeless mentally ill adults are provided permanent housing and accessible mental health treatment and specialized social services, they are likely to avoid unstable housing patterns, which are associated with higher use of inpatient services.