Regular observations were made of a group of residents and staff on a long stay psychiatric ward and in the early months following their move to the community. During the period before the move, staff and residents colluded to prevent residents' active involvement in the preparations. Immediately following the move, staff seemed unsure of their roles and value, and residents expressed continued uncertainty about their identity as psychiatric patients versus members of the community. The results were interpreted in terms of the threat that transition from hospital to community represents to the defensive social structures developed by each group to cope with the anxieties inherent in their position. For the residents, this threat is to their already ambiguous identities as neither "mad" nor "normal". For the staff, it means greater intimacy with the residents and raises expectations of improvement that may not be fulfilled.