Older adults with serious mental illness disproportionately reside in nursing homes despite the U.S. Supreme Court Olmstead decision supporting the rights of persons with disabilities to benefit from integrated services in the community. This commentary addresses the neglected policy debate on implementing Olmstead for this rapidly growing, older population with special needs. First, the author describes research findings on older adults with serious mental illness living in nursing homes who might more appropriately reside and receive services in the community. Second, the author summarizes the evidence base for effective psychosocial rehabilitation interventions and services facilitating independent living in community settings for this subgroup. Finally, he concludes with seven policy recommendations aimed at advancing the promise of the Olmstead decision with respect to older adults with serious mental illness.