The plight of the homeless mentally ill (HMI) in Canada & the US is examined, & results of a study on the effects of deinstitutionalization are reported. Data from participant observation of, & interviews with, 285 chronic & nonchronic ex-psychiatric patients living in 8 metropolitan areas in southern Ontario show that the origins of the HMI are closely connected with changing conceptions of mental illness, mental health, professional self-interest, power, prestige, & various economic issues. Perceptions of the HMI about their plight are explored, & the many failed policy attempts to deal with the HMI are discussed. It is argued that the massive expenditures on social programs promised in the 1970s & 1980s by policymakers & politicians never materialized. Policy suggestions are offered. 51 References.