In the last few years, the British National Health Service, local government social services departments, the welfare benefits system, and the organization of primary health care in the United Kingdom have undergone major reforms that have had significant effects on mental health services. Local social service departments were given the lead role in purchasing and coordinating community supports for persons with mental illness, but were not given enough funds to arrange adequate services. In the National Health Service, an internal-market approach, in which local health authorities could contract with any provider or group of providers, was introduced. This purchaser-provider split has created a climate of competition in a traditionally collaborative environment and has reduced staff morale. Similar but separate case management models were introduced in both the health service and the social service departments, which has led to inefficiency in planning care for individual patients. Opportunities were created for general practitioners to use capitated funds to purchase specialty care directly from providers. This arrangement resulted in an initial emphasis on care for less severely mentally ill patients, although some general practitioners are beginning to explore new approaches for supporting severely ill patients in the community. On the positive side, the reforms have led to greater involvement of patients and their families in planning service delivery. However, the authors suggest that policy makers in the U.K. seem to be repeating many of the mistakes made by American mental health systems in the 1960s and 1970s.