The author reviews the clinical and special social environmental data from the Soteria Project and its direct successors. Two random assignment studies of the Soteria model and its modification for long-term system clients reveal that roughly 85% to 90% of acute and long-term clients deemed in need of acute hospitalization can be returned to the community without use of conventional hospital treatment. Soteria, designed as a drug-free treatment environment, was as successful as anti-psychotic drug treatment in reducing psychotic symptoms in 6 weeks. In its modified form, in facilities called Crossing Place and McAuliffe House where so-called long-term "frequent flyers" were treated, alternative-treated subjects were found to be as clinically improved as hospital-treated patients, at considerably lower cost. Taken as a body of scientific evidence, it is clear that alternatives to acute psychiatric hospitalization are as, or more, effective than traditional hospital care in short-term reduction of psychopathology and longer-term social adjustment. Data from the original drug-free, home-like, nonprofessionally staffed Soteria Project and its Bern, Switzerland, replication indicate that persons without extensive hospitalizations (<30 days) are especially responsive to the positive therapeutic effects of the well-defined, replicable Soteria-type special social environments. Reviews of other studies of diversion of persons deemed in need of hospitalization to "alternative" programs have consistently shown equivalent or better program clinical results, at lower cost, from alternatives. Despite these clinical and cost data, alternatives to psychiatric hospitalization have not been widely implemented, indicative of a remarkable gap between available evidence and clinical practice.