One of the major concerns in present-day psychiatry is the criminalization of persons with serious mental illness (SMI). This trend began in the late 1960s when deinstitutionalization was implemented throughout the United States. The intent was to release patients in state hospitals and place them into the community where they and other persons with SMI would be treated. Although community treatment was effective for many, there was a large minority who did not adapt successfully and who presented challenges in treatment. Consequently, some of these individuals’ mental condition and behavior brought them to the attention of law enforcement personnel, whereupon they would be subsequently arrested and incarcerated. The failure of the mental health system to provide a sufficient range of treatment interventions, including an adequate number of psychiatric inpatient beds, has contributed greatly to persons with SMI entering the criminal justice system. A discussion of the many issues and factors related to the criminalization of persons with SMI as well as how the mental health and criminal justice systems are developing strategies and programs to address them is presented.