There has been no comprehensive history of the scope and roles of private psychiatric hospitals in the USA. This paper documents the origins, functions, support, and contributions of private psychiatric hospitals from their beginnings in the eighteenth century through 2003. An interesting feature of nineteenth century psychiatry was the interplay between private and public institutions which reveals a pattern of the public purchase of private beds that is conceptually much like what we have today. From the early twentieth century through 1970, advancements in somatic treatments, new ways of using the hospital milieu, the introduction of antipsychotic medications, the shift from institution-based to noninstitution-based loci of acute and long-term treatment and care, the beginnings of day hospitals and a shortage of psychiatrists and nurses, all impacted upon the private psychiatric hospital. While the private psychiatric hospitals expanded in number and in responsibilities during these decades, at the end of the 1960's their future was a matter of serious debate. A comprehension of the history of the private psychiatric hospital since 1970 is based on an understanding of the impact of for-profit hospital chains, managed care, the privatization of traditionally public services, the requirement for "treatment in the least restrictive alternative," further erosion of the use of any form of inpatient treatment, and an overall decrease in expenditures for mental health services. The future of the private psychiatric hospital may well be based on its ability both to maintain its traditional, patient-centered approach and to create innovative, effective, efficient, novel systems of care and treatment.