The impact on services and outcomes of the local mental health authorities (LMHAs) developed under the RWJF Program on Chronic Mental Illness (CMI) was evaluated in Baltimore, Cincinnati, Columbus, and Toledo. Two cohorts of clients with CMI discharged from an episode of acute 24-hour care were recruited in each city: the first cohorts were drawn shortly after the demonstration began and the second, two years later. The LMHAs in the three Ohio cities increased case management for the second cohorts at two months, but not at 12 months, after hospital discharge. The second cohorts in Baltimore and Cincinnati experienced lower turnover among case managers during the year after discharge, but there was no significant improvement in client outcomes. Creation of LMHAs may be a necessary, but not sufficient, step toward improving outcomes and should be followed by improvement in the quantity and quality of services.