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Mental health services in developed nations have a recovery orientation. In this context, ‘recovery’ does not mean being symptom-free, but instead indicates that a person is ‘living a satisfying, hopeful and contributing life even with the limitations caused by illness’ (Anthony, 1993; p. 975). Australia’s Fourth National Mental Health Plan sets social inclusion as its first priority and prescribes work integration as a key action and outcome by which people with mental illness achieve both social and economic inclusion. Research has identified the core components of recovery as: hope, social inclusion or connexion, empowerment and wellbeing, with ‘hope’ being the first and central requirement. This study explored the relationships between hope, social inclusion and mental wellbeing in a sample of people in recovery from mental illness.Participants were 70 adults (60% male) with a psychiatric disability (71.4% schizophrenia) who were engaged in supported employment (i.e., they were receiving a productivity-based wage). All completed a battery of psychometric measures and open-ended questions.Compared to clinical samples of people diagnosed with a mental disorder, the participants in this study had higher levels of hope, social inclusion and mental wellbeing, and lower levels of psychological distress. Hope and social inclusion predicted mental wellbeing, with social inclusion partially mediating the relationship between the other two constructs. Participants reported experiencing the psychosocial benefits of work (e.g., structured activity and a shared purpose) but were dissatisfied with their wages.Work integration through supported employment provides an opportunity for social inclusion and the prevention of long-term work disability. Engagement in work significantly mediates recovery from severe mental illness and facilitates a healthy level of mental wellbeing. Work integration can be achieved in the presence of ongoing symptoms and despite the absence of full economic inclusion. Australian health policy is supported.