OBJECTIVES: We compared the influence of substance abuse with that of other comorbidities (e.g., anxiety, HIV) among people with mood disorder (N=129,524) to explore risk factors for psychiatric hospitalization and early readmission within 3 months of discharge. METHODS: After linking Medicaid claims data in 5 states (California, Florida, New Jersey, New York, and Texas) to community-level information, we used logistic and Cox regression to examine hospitalization risk factors. RESULTS: Twenty-four percent of beneficiaries with mood disorder were hospitalized. Of these, 24% were rehospitalized after discharge. Those with comorbid substance abuse accounted for 36% of all baseline hospitalizations and half of all readmissions. CONCLUSIONS: Results highlight the need for increased and sustained funding for the treatment of comorbid substance abuse and mood disorder, and for enhanced partnership between mental health and substance abuse professionals.