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This exploratory cross-sectional study examined adjustment over time of three groups of seniors with serious mental illnesses (N=33), who were transferred from a psychiatric hospital to a community residential facility from 1995-1998. The study participants had lived in the community for 6-41 months. Outcomes included measures of global, social, cognitive and ADL functioning, quality of life and rehospitalizations. Analyses revealed no significant deterioration in symptomatology, cognitive and ADL functioning between groups and a significant change in social functioning. Five participants were readmitted for short hospitalizations. Participants in all groups expressed a positive quality of life in their current community residence.