Patients with serious mental illness (SMI), particularly those with other chronic illnesses, may be vulnerable to unplanned hospital readmission. We hypothesized that SMI would be associated with increased 30-day hospital readmission in a cohort of adult patients with comorbid diabetes admitted to a tertiary-care facility from 2005–2009. SMI was defined by ICD-9 discharge diagnosis codes for schizophrenia, schizo-affective, bipolar, manic, or major depressive disorders, or other psychosis. The primary outcome was 30-day readmission to the index hospital. Among 26,878 eligible admissions, prevalence of SMI was 6% and incidence of 30-day hospital admission was 16%. Among patients aged <35 years, SMI was significantly associated with decreased odds of 30-day hospital readmission (OR 0.39, 95% CI: 0.17, 0.91). However, among patients ≥35 years, SMI was not significantly associated with 30-day hospital readmission (OR 1.11, 95%CI: 0.86, 1.42). SMI may not be associated with increased odds of 30-day hospital readmission in this population.