Homelessness as a dimensional concept reflecting instability of community living arrangements was examined in an urban state hospital's sample of 187 aftercare patients with chronic mental illness. According to ratings by outreach clinicians, 17 percent of the patients were predominantly homeless, and 10 percent were occasionally homeless over the six months before evaluation. Younger, male patients were more likely to be homeless. Homelessness was strongly associated with abuse of alcohol and street drugs, treatment noncompliance, and a variety of psychosocial problems and psychiatric symptoms. Homeless patients were viewed by their primary clinicians as attracted to the hospital as a living alternative and, during prospective one-year follow-up, had a much higher rate of rehospitalization.