The authors describe the use of an Assertive Community Treatment (ACT) approach in a community living program for persons with both mental retardation and mental illness. The development of the program occurred in the context of a statewide project to serve more than 1,000 dually diagnosed persons who were members of a class action lawsuit against the State of North Carolina. The use of ACT principles marked a substantive departure from the residential supervision and brokered service model employed for the Class throughout the State. The authors describe the public policy context within which the program was developed, discuss the rationale for selecting the ACT model, describe its implementation, and summarize service utilization and outcome information. Changes by the funding agency in its expectations of program staffing and reimbursement methodology that were made after the program was approved led to its early demise. Although the program lasted less than 2 years, during its tenure most participants realized marked improvement in symptoms and community adjustment. Results may cautiously be interpreted as indicating that ACT may reduce the reliance on 24-hour residential and community supervision for many persons with both mental retardation and mental illness.