Substance use disorder is the most common and clinically significant co-morbidity among clients with severe mental illnesses, associated with poor treatment response, homelessness and other adverse outcomes. Residential programs for clients with dual disorders integrate mental health treatment, substance abuse interventions, housing and other supports. Ten controlled studies suggest that greater levels of integration of substance abuse and mental health services are more effective than less integration. Because the research is limited by methodological problems, further research is needed to establish the effectiveness of residential programs, to characterize important program elements, to establish methods to improve engagement into and retention in residential programs and to clarify which clients benefit from this type of service.