This paper argues that the experience of homelessness is inherently traumatic and thus has the potential to affect the manifestation of mental illness. The experiences related to being homeless might act as specific and unique sources of vulnerability. This study included 424 people diagnosed with serious mental illnesses living in supported housing programs in South Carolina. Three hierarchical regression analyses measuring the impact of homelessness on three types of outcomes revealed the following: (1) ever experiencing homelessness as well as the amount of time spent homeless were related to higher levels of psychiatric distress, (2) ever experiencing homelessness was related to higher levels of reported alcohol use, and (3) total amount of time spent homeless was related to lower perceived recovery from mental illness. These findings suggest that experiencing homelessness might contribute to psychosocial vulnerability to negative mental health outcomes. Future investigations examining this concept of risk and vulnerability as a result of homelessness are in order.