The results of milieu therapy with psychotic patients have been highly conflicting because of unrecognized differences among the wards investigated. Our own research indicates that for psychotic patients in short- and intermediate-term wards: A beneficial milieu has a low perceived level of anger and aggression and a high level of support, practical orientation, and order and organization. Confronting group therapy is detrimental and individually oriented milieu therapy beneficial. Community groups may become anti-therapeutic pseudo-groups. Extensive use of confrontational groups may contribute to a detrimental ward atmosphere. A high mean age of patients may contribute to a favorable low level of aggression. A high percentage of psychotic patients, a high number of patients, and a high staff turnover may lead to a detrimental atmosphere. On this basis we tried to change the milieu on a 26-bed therapeutic community ward which proved to have pseudo-groups and a detrimental ward atmosphere. The amount of compulsory group activities was reduced, the groups made more task-oriented, the amount of individually oriented milieu therapy increased, and the number of beds reduced. At re-evaluation the ward atmosphere had improved considerably.