Despite a substantial decrease in the number of people confined to state psychiatric hospitals in the last decade, some individuals remain hospitalized who are no longer determined to be a danger to themselves, property or others but for whom discharge has been problematic. The clinical issues that affect the discharge of these individuals generally fall into four categories (Boyer et al. in Barriers to discharge, optimal housing and supportive mental health services for residents with conditional extension pending placement legal status, 2006). The first occurs when hospitalized individuals are resistant to discharge, the second occurs when individuals have persistent non-dangerous psychiatric symptoms and or behavior problems that make discharge difficult. The third and fourth barriers, respectively, involve individuals with major medical co-morbidities and/or co-occurring intellectual disability. This paper describes a program designed to discharge individuals who present with one or more of these unique needs in one state psychiatric hospital in the north eastern United States. “The Special Treatment Cottage” (STC) program was initiated for hospitalized individuals who had been determined ready to be discharged but who remained in the hospital until they were willing or able to tolerate discharge and until appropriate residential services could be found. The STC program involved the development of a specialized therapeutic setting in which clinical discharge barriers would be targeted and the focus of treatment would be on discharge. In the first year of operation the STC program admitted a total of 22 residents with an average length of hospitalization of over 5 years. Fifty percent of the hospitalized individuals (11) were discharge within an average of 7 months of entering the program. The clinical strategies utilized are discussed along with a description of the critical ingredients thought to be responsible for the success of the program. Suggestions for future work in this area are also addressed.