Objective: To determine if the Transdiagnostic Intervention for Sleep and Circadian Dysfunction (TranS-C) improves functional impairment, psychiatric symptoms, and sleep and circadian functioning. Method: Adults diagnosed with serious mental illness (SMI) and sleep and circadian dysfunction (N = 121) were randomly allocated to TranS-C plus usual care (TranS-C + UC; n = 61; 8 individual weekly sessions) or 6 months of Usual Care followed by Delayed Treatment with TranS-C (UC-DT; n = 60). Schizophrenia (45%) and anxiety disorders (47%) were common. Blind assessments were conducted pre-treatment, post-treatment, and 6 months later (6FU). The latter two were the post-randomization points of interest. The location was Alameda County Behavioral Health Care Services (ACBHCS), a Community Mental Health Center (CMHC) in California. Results: For the primary outcomes, relative to UC-DT, TranS-C + UC was associated with reduction in functional impairment (b = −3.18, p = 0.025, d = −0.58), general psychiatric symptoms (b = −5.88, p = 0.001, d = −0.64), sleep disturbance (b = −5.55, p < .0001, d = −0.96), and sleep-related impairment (b = −9.14, p < .0001, d = −0.81) from pre-treatment to post-treatment. These effects were maintained to 6-month follow-up (6FU; d = −0.42 to −0.82), except functional impairment (d = −0.37). For the secondary outcomes, relative to UC-DT, TranS-C + UC was associated with improvement in sleep efficiency and on the Sleep Health Composite score from pre-treatment to 6FU. TranS-C + UC was also associated with reduced total wake time and wake time variability from pre-treatment to post-treatment, as well as reduced hallucinations and delusions, bedtime variability, and actigraphy measured waking activity count variability from pre-treatment to 6FU. Conclusions: A novel transdiagnostic treatment, delivered within a CMHC setting, improves selected measures of functioning, symptoms of comorbid disorders, and sleep and circadian outcomes.