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OBJECTIVE: In response to provisions of the Omnibus Budget Reconciliation Act of 1987 that sought to reduce the number of mentally ill persons in nursing homes, the Illinois Department of Human Services in 1989 developed small-scale residential treatment programs known as community integrated living arrangements. This study examined satisfaction with residential services and days of hospitalization among residents of these facilities. METHODS: Seventy-four residents from nine randomly selected community integrated living arrangement facilities were surveyed with the Quality of Life Interview to determine their satisfaction with their residence. Data on hospitalization before and after program placement were obtained from residents' charts and from an Illinois Department of Human Services database on utilization of state-operated facilities. RESULTS: Residents of community integrated living arrangement facilities had a mean rating of satisfaction with their residence of 5.2, "mostly satisfied," on a scale from 1 to 7. Residents with continuous supervision and those with intermittent supervision were equally pleased with their living arrangements. Residents' hospital use decreased from a mean of 47.7 days during the year before program placement to 5.3 days during their first year in the program. CONCLUSIONS: The level of satisfaction with the community integrated living arrangement residences was fairly high and was comparable to levels reported in related research on independent living arrangements. The decrease in residents' hospital use in the year after program placement suggests that the community integrated living arrangements help maintain severely mentally ill individuals in the community.