Abstract. Under a 1978 federal court consent decree, Massachusetts developed a comprehensive system of community based residential and non-residential services to minimize the utilization of one of its state hospitals. This paper describes the service system and its impact on the use of the state hospital by the chronically mentally ill elderly. The findings show that the development of a continuum of services can all but eliminate the use of the state hospital by psychiogeriatric patients. The authors suggest consideration be given to many of the system's elements in planning future services for this population.