Governmental policies of deinstitutionalization and legal decisions limiting involuntary hospitalization have led to increased arrests of mentally ill persons. In effect, this has transferred care of a significant number of mentally ill individuals from the mental health system to the criminal-justice system and represents a major challenge for those attempting to address inmates' need. This is especially true when staff are preparing offenders for return to the community. The authors discuss implementation of this approach in the District of Columbia and contrast it with a previous approach that based referrals primarily on the nature of inmates' offenses. The new referral system resulted in identification of a significantly greater number of mentally ill offenders, while decreasing overall number of referrals. An evaluation of attitudes of referring staffs from the Department of Corrections and Parole Board showed these staffs felt the new guidelines were more effective in selectively identifying inmates in need of mental health services. (Author abstract)