Most mental health literature on homelessness has focused on characteristics that may be risk factors for homelessness. The authors of this article argue that homelessness itself is a risk factor for emotional disorder and use the construct of psychological trauma--focusing on social disaffiliation and learned helplessness--to understand the potential effects of homelessness. Psychological trauma is likely among homeless individuals and families for three reasons. (a) The sudden or gradual loss of one's home can be a stressor of sufficient severity to produce symptoms of psychological trauma. (b) The conditions of shelter life may produce trauma symptoms. (c) Many homeless people--particularly women--become homeless after experiencing physical and sexual abuse and consequent psychological trauma. Research suggests that negative psychological responses to traumatic events can be prevented or mitigated by a supportive and empowering posttrauma environment. The implications of trauma theory for improving the psychosocial conditions of homeless people are discussed.