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Quality of life, once a priority in caring for people with severe mental illness, has since been eclipsed by other concerns. This article returns attention to quality of life by offering a theory of social integration (as quality of life) for persons disabled by severe mental illness.Data collection for this qualitative study consisted of 78 individual, unstructured interviews with 56 adults who have been psychiatrically disabled. Field observations and interviews with staff and service users were carried out during eight ethnographic visits to service sites working to promote social integration. Data were analyzed with an inductive strategy based on grounded theory methodology and framed theoretically by the capabilities approach to human development. Goals were to identify personal capacities needed for integration, characterize occasions for capacity development in mental health care, and develop a working theory.Six personal capacities were identified: responsibility, accountability, imagination, empathy, judgment, and advocacy. Occasions were characterized in terms of their defining mechanisms: contradiction, reinterpretation, rehearsal, raising expectations, and confrontation. A working theory was constructed to characterize the process of capacity development for social integration through exposure to increasingly challenging occasions for growth in the context of mental health care.Capacities for social integration can be effectively developed as part of the everyday routines of mental health care. Eventually, the process shifts from development to the exercise of capacities and to participation as full citizens in the social world beyond treatment.