Health service reforms have led to relocation of care of the chronic mentally ill from institutions to the community, with subsequent demands on the primary health care team. Few studies have attempted to identify satisfactory models of care for this patient group. This study explores the impact of the employment of a community psychiatric nurse (CPN) by a general practice in Aberdeen city to co-ordinate care of discharged long-stay psychiatric patients resettled in hostels. A similar general practice with a comparable group of registered patients was selected as a control group. Patient health outcome was measured using the Health of the Nation Outcome Scales (HoNOS) and service providers' views on dedicated psychiatric care within general practice were explored using qualitative methods. Improvements in communication, liaison and drug management were reported in the intervention practice. A primary care-based CPN service dedicated to the care of the chronic mentally ill promoted a smooth transfer of care from long-term institutionalized care to the community setting.