Two alternatives to incarcerated mentally ill offenders include imposition of a probation order with psychiatric requirements, and the provision of medium security psychiatric institutionalization. The imprisonment of this population is discussed in terms of care and containment issues, the reception process, and the implementation of a model of clustering medical services and facilities. The paper considers possible solutions to the problem of dealing with mentally disturbed offenders that have been put forth, and recommends changes that would improve the criminal justice response to mentally ill offenders who are at risk of incarceration.