The relationship between the criminal justice and mental health systems is modeled in terms of the causal processes that underlie it; processes that are common to both systems; and processes that underlie the effect of one system on the other. Using a panel of cities, the article revealed strong cross-capacity, which influences both jail and hospital admissions. The study did not observe a hypothesized negative effect of hospital capacity on jail admissions, providing no support for the functional-alternative hypothesis. However, the effect of jail capacity on hospital admissions was both positive and statistically significant, providing strong support for the conduit hypothesis. The study noted a dramatic effect of percent-black on jail capacity, which was time invariant and increased as segregation increased. Given the strong effect of jail capacity on jail and hospital admission rates, percent-black also showed a substantial and positive indirect effect on both jail and hospital admission rates, which increased as segregation increased. Notes, figure, tables, references