For nearly 30 years jail diversion programs have had wide support as a way to prevent people with mental illnesses and substance use disorders from unnecessarily entering the criminal justice system by providing more appropriate community-based treatment. Although these programs have had wide support, very few systematic outcomes studies have examined their effectiveness. This paper discusses findings on rates of incarceration of persons with serious mental illness and co-occurring substance use disorders in U.S. jails, summarizes recently completed research on jail diversion programs, and describes a three-year research initiative begun in 1997 by the Substance Abuse and Mental Health Services Administration that uses a standardized protocol to examine the characteristics and outcomes of various types of jail diversion programs in nine sites throughout the U.S.