Shared decision making (SDM) is an effective health communication model designed to facilitate patient engagement in treatment decision making. In mental health, SDM has been applied and evaluated for medications decision making but less for its contribution to personal recovery and rehabilitation in psychiatric settings. The purpose of this pilot study was to assess the effect of SDM in choosing community psychiatric rehabilitation services before discharge from psychiatric hospitalization. A pre-post non-randomized design with two consecutive inpatient cohorts, SDM intervention (N = 51) and standard care (N = 50), was applied in two psychiatric hospitals in Israel. Participants in the intervention cohort reported greater engagement and knowledge after choosing rehabilitation services and greater services use at 6-to-12-month follow-up than those receiving standard care. No difference was found for rehospitalization rate. Two significant interaction effects indicated greater improvement in personal recovery over time for the SDM cohort. SDM can be applied to psychiatric rehabilitation decision making and can help promote personal recovery as part of the discharge process.