Objective: The objective of this policy paper is to put recent developments in Dutch mental health reform in an international perspective and draw conclusions for future directions in policy. Context of the case: The practice of Western psychiatry in the second half and particularly in the last decade of the 20th century has fundamentally changed. Dutch psychiatry has traditionally been prominently bed-based and various policies in the last ten years have been intended to reduce the influence of the mental hospitals. Until the mid-1990s, this had not resulted in reducing the psychiatric bed rate in comparison to other countries. Since then, there have been rapid, dramatic changes. Data sources: We summarised two recent national studies on this subject and placed them in a national and international context, using documents on psychiatric reforms, government and advisory board reports and reviews on deinstitutionalisation in different countries. Case description: The practice of psychiatry in the second half, and particularly in the last decade, of the 20th century has fundamentally changed. This has resulted in a spectacular decline in the number of beds in mental hospitals, increased admissions, decreased length of stay, closure of the large asylums and in community treatment away from asylums and in society, although this is a reform process. This article examines how the Dutch mental health care system has developed at the national level. The main topics cover the size, nature, aims and effects of the process of deinstitutionalisation and how alternative facilities have been developed to replace the old-fashioned institutes. Conclusions and discussion: There are two contrasting aspects of deinstitutionalisation in Dutch mental health care: the tendency towards rehospitalisation in relation to the sudden, late, but rapid reduction of the old mental hospitals and their premises; and a relatively large scale for community-based psychiatry in relation to building mental health care centres. Compared to other ...