The two major challenges facing people with mental health conditions (MHCs) are stigma and discrimination. This study focused on the Amitim program’s nationwide integrated arts-based groups that not only aim to impart knowledge and skills in the arts (e.g., theater, writing, music, poetry, visual art, etc.) but also reduce public and self-stigma, and promote personal recovery. This study, composed of a sample of 642 Israeli adults, examined whether people with MHCs and nonclinical community members who attended the integrated groups would report greater adaptive changes in outcomes than those who did not participate, the association of change process factors and in-group factors with these outcomes, and candidate mediators in the association between participation in the groups and the outcomes. The findings showed that change in creative self-efficacy (CSE) significantly predicted adaptive change in outcomes in people with MHCs who participated in these integrated arts-based groups. Participants with MHCs in groups facilitated by arts therapists reported significantly more positive outcomes than participants in groups with facilitators from other professional human services. Nonclinical community members in the integrated groups reported higher postprogram CSE and less desire for social distance from people with MHCs compared with the control group. Finally, change in the desire for social distance significantly mediated the relationship between group participation and change in public stigma. Overall, direct intergroup contact while engaging in arts-based activities appears to be a promising way to promote positive changes in people with MHCs and nonclinical community members. The implications and future directions are discussed.