This report examines current trends in specialized mental health care in the U.S. Department of Veterans Affairs (VA). Over the period 1999 to 2002, inpatient bed-days declined steadily, and the number of outpatient visits increased. Outpatient pharmacy spending increased by nearly 19 percent per year, whereas spending for inpatient, residential, and outpatient nonpharmacy services increased by less than 1.5 percent per year. Total per capita spending declined from $3,262 to $3,061 as the number of patients served increased faster than did total spending. These trends most likely reflect VA policy changes and the impact of new psychiatric medications.