Liaison and Diversion (L&D) has twin objectives: improving mental health outcomes and reducing re‐offending. Early diversion from police custody seems promising, but evidence of benefit is required to sustain such programmes. To test the hypothesis that contact with L&D services while in police custody would lead to improved mental health outcomes and a reduction in type and level of offending, we used a pre–post service use design. National Health Service (NHS) records in two counties were searched for evidence that patients had been involved with L&D services while in police custody during the period July 2009–December 2017. We defined January 2009–July 2014 as the pre‐intervention period and any time after contact as the post‐intervention period. Data from the Police National Computer were gathered for each period for these individuals, to assess their pre‐post L&D contact offending histories. NHS Trust data were similarly gathered to assess their pre‐post use of mental health legislation. 4,462 individuals were identified who had used L&D services in police custody. There were statistically significant reductions in the amount of offending following contact with the L&D service (whether one or two contacts), regardless of offence type. Statistically significant reductions were also observed in use of the four most commonly used legislative powers for detaining patients in hospital on mental disorder grounds, regardless of offending status (prolific/non‐prolific). Our results indicate positive associations between the L&D interventions and change in offending and use of compulsory hospital detention. Whilst our research does not allow a direct causal relationship to be established in either area, the findings go beyond other impact assessments of L&D which have either been with small samples or relied only on qualitative data or expert opinion.