Fifty‐four patients of a Veterans Administration Medical Center were assigned to either a life‐skill training program that emphasized psycho educational instruction and skill building or to a group counseling control condition. Subjects assigned to life‐skill training were provided with 28 hours of instruction in interpersonal communication, purpose in life problem solving, and physical fitness/health maintenance. Control subjects received equal time engaged in psychiatric treatment that emphasized the analysis and exploration of personal problems, but with no direct coping skill training. Significant differences between the two groups were found on measures of interpersonal communication and meaningful purpose in life. Both groups received lower staff ratings on psychopathological behavior and demonstrated improvement on ratings of health and physical fitness upon completion of treatment. Twelve‐ and 24‐month follow‐up data that include re‐hospitalization rates are presented for each group.