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OBJECTIVES: The purpose of this study was to evaluate effects associated with moving patients from hospital to community-based settings, to compare persons who left the hospital with those who remained in the hospital, and to address the question of whether discharge reverses institutionalism in a sample of elderly long-stay psychiatric inpatients. METHODS: The hypotheses were that, compared with the control group of patients who stayed in the hospital, those who left would have significantly better mental states, social functioning, and social networks at follow-up; that community settings would provide a significantly better quality of environment than the hospital; and that discharged patients would express a preference for community care after discharge from the hospital. The study was a prospective nonrandomized controlled trial at Cane Hill, Friern, and Claybury Hospitals in England. Sixty long-term patients with schizophrenia who were discharged to community care were compared over time with matched controls (N=131). RESULTS: No overall differences were detected in the pattern or severity of symptoms between patients who were discharged from the hospital and those who were not, and no significant changes over time were noted. Significant improvements in social networks, patients' preference for community settings, and quality of clinical environment were noted. CONCLUSIONS: These results give qualified support for moving long-stay psychiatric patients from hospital to community settings.