OBJECTIVE: The study compared the social environment of a conventional psychiatric inpatient setting with that of a combined acute day hospital and crisis respite program that functions as an alternative to hospitalization for patients judged appropriate for acute inpatient admission. METHODS: As part of a randomized controlled study comparing the clinical effectiveness and cost-effectiveness of the two settings, the quality of the social environment in the two settings was assessed using the Multiphasic Environmental Assessment Procedure, an empirical measure of established reliability and validity that is based on objective ratings and perceptions of staff members and patients. RESULTS: Compared with the inpatient setting, the day hospital-crisis respite program had higher expectations for patients' functioning, a lower tolerance for deviance, and more flexibility in patients' choice of activities. The day hospital-crisis respite program also had a more attractive physical environment, and respondents rated its social milieu as more cohesive, less conflictual, and more comfortable. This setting also promoted higher levels of patient functioning and activity and more utilization of health services, assistance with daily living skills, and social and recreational resources and encouraged fuller integration of patients in the community. CONCLUSIONS: The social environment of the community-based day hospital-crisis respite program embodied several principles of community support systems, including provision of treatment in a less restrictive setting, avoiding disruption of patients' ongoing involvement in the community, promoting activities in the community, offering patients respect and opportunities for self-determination, and enhancing their dignity.