SYNOPSISIn a prospective controlled investigation chronic patients, the majority with neurotic conditions, were randomly allocated either to community psychiatric nurses (CPN) as the main therapist or to routine out-patient psychiatrist follow-up. There was no statistically significant difference in the mean public expenditure for the two modes of care. The direct costs of psychiatric care comprised a small proportion of total public expenditure and were initially greater in the nursing group. Subsequently, and over the whole 18-month study period, nursing was the cheaper option in terms of these direct costs. Clinical and social outcomes were comparable in both follow-up groups. Consumer satisfaction was significantly greater among CPN patients. On balance, these results confirm the benefit of community psychiatric nursing for this patient group.