OBJECTIVE: The reorganization in 1981 of a general hospital psychiatric ward in Oslo, Norway, to achieve a more suitable treatment milieu for patients with schizophrenia resulted in a change in patients' perceptions of the ward atmosphere. Reduced group participation and increased individualized support from staff led patients to perceive of the ward as having a low level of anger and aggression and a high level of order and organization. This study examined whether the reorganization was associated with improved treatment outcome. METHODS: Psychiatrists retrospectively examined the charts of all patients with a DSM-III-R diagnosis of schizophrenia or schizophreniform disorder who were admitted to the ward the year before and the second year after the reorganization. Multiple regression analyses were used to examine treatment outcomes for both groups. Outcome was measured indirectly by length of stay, level of functioning at discharge, and whether the patient was rehospitalized during the following seven years. RESULTS: Patients treated after the reorganization had significantly shorter stays with no reductions in either level of functioning at discharge or length of community tenure after discharge. Differences in demographic characteristics, illness history, or psychopharmacological treatment could not account for differences in outcome. CONCLUSIONS: The results supported the hypothesis that the organization and milieu of brief-stay wards influence the short-term outcome of inpatient treatment of patients with schizophrenia.