Milieu therapy is an interdisciplinary treatment approach widely applied in psychiatric settings. Current short stay inpatient trends indicate a need to adapt the approach so that it remains useful for nursing practice in those settings. This report presents basic historical milieu concepts with their relationships to patient outcome; current short stay patient needs, outcomes, and nursing actions are developed and linked with the historical concepts. The resulting transformed theory can be seen as an adaptation of the classic approach, tailored to short stay settings, with short-term goals and a clarified role for the nurse in the milieu.