Key characteristics of recovery homes include governance style (which can play a central role in structuring recovery mechanisms), social embeddedness (e.g., social relationships within the home), economic viability (e.g., the individual's ability to be self-supporting), and learned recovery skills (such as coping with stress, avoiding putting one's self in risky situations, etc.). These domains can have important associations with perceived quality of life (measured across physical, psychological, social relationships, and environmental domains). The current study investigated relationships among these key "active ingredients" (Moos, 2007) of recovery homes. In addition, we present dynamic model consistent with these observed relationships, to illustrate how relevant mechanisms interact over time to and affect system evolution. Data were collected from recovery home residents in three states. Findings supported our overall hypotheses indicating that social embeddedness, stress, and self-efficacy were related to quality of life, and policy and treatment-design implications are further examined by simulating system dynamics.Alcohol and drug abuse are among the most expensive health problems in the U.S., totaling about $428 billion annually (Sacks, Gonzales, Bouchery, Tomedi, & Brewer, 2015). Although 8%−9% of the U.S. population has an alcohol or substance use problem at any given time, only 1.5% of the population seek and receive treatment each year for these disorders (about 3.8 million individuals; SAMHSA's National Survey on Drug Use and Health, 2011). Compounding this gap, even individuals who successfully complete treatment have high relapse rates (SAMHSA, 2017). Some who relapse will eventually end up in homeless shelters or jail; costs for temporary shelter beds range from $19-$85 per day (US. Dept. of Housing and Urban Development, 2010), and costs to house a prison inmate is Requests for reprints should be sent to