Using data from the National Hospital Discharge Survey and the Inventory of Mental Health Organizations, this article examines national trends in psychiatric inpatient care from 1988 to 1994 in general hospitals and mental hospitals. We find that discharges with a primary diagnosis of mental illness in general hospitals increased from 1.4 to 1.9 million during this period. The total increase of 1.2 million days of care in general hospitals was small relative to the reduction of 12.5 million inpatient days in mental hospitals. General hospital discharges increased most in private nonprofit hospitals and declined substantially in public hospitals. Length of stay has fallen most substantially in private nonprofit hospitals. Public programs have increasingly replaced private insurance as the major source of payment. These observations suggest that psychiatric inpatient care in general hospitals can be characterized as a process in which patients who would have been clients of public mental hospitals in a prior period replace privately insured patients who, under managed care, are largely treated in community settings. Private nonprofit general hospitals increasingly treat publicly financed patients with more severe illnesses.