OBJECTIVE: This study evaluated outcomes of a residential-work therapy program for veterans with chronic, severe substance use disorders. METHODS: Admission and three-month outcome data were gathered for 496 veterans treated in the Department of Veterans Affairs' Compensated Work Therapy-Transitional Residence program. Multivariate techniques were used to assess the relationship between admission risk factors, treatment elements, and outcome measures. RESULTS: Substantial improvement was observed in substance abuse and most other outcome domains, with 65 percent of the sample reporting no substance use during the three months after discharge. The most powerful baseline prognostic factors were functional status and frequency of social contact. Of 14 significant relationships observed between the intensity of treatment elements and outcomes, 12 were in the expected direction, associating more intensive treatment with improvement. The largest number of significant relationships with outcome were observed for weekly toxicology screens, earnings, and length of stay. CONCLUSIONS: The study results support the effectiveness of a rehabilitative approach to the treatment of severe substance abuse that combines residential support with demands for responsible behavior.