Using a random sample of 48 outpatient mental health programs in low-income and racial and ethnic minority communities, this study examined directorial leadership, drug treatment licensure, and implementation of evidence-based protocols and practices to address co-occurring mental health and substance abuse disorders (COD). Understanding of findings was enhanced with focus groups at six clinics. Most programs (81 %) offered COD treatment. Directorial leadership was positively associated with COD treatment (β = 0.253, p = 0.047, 95 % CI 0.003, 0.502) and COD supervision and training (β = 0.358, p = 0.002, 95 % CI 0.142, 0.575). Licensure was negatively associated with COD treatment (β = -0.235, p = 0.041, 95 % CI -0.460, -0.010) and COD supervision and training (β = -0.195, p = 0.049, 95 % CI -0.389, -0.001). Although lack of financial integration may limit the effect of licensing on COD treatment implementation, the response of leaders to regulation, funding, and human resources issues may encourage COD treatment practices. Implications for leadership interventions and policy are discussed in the context of health care reform.