Background: The Ministry of Defence has its own hospital for soldiers requiring admission for mental health problems. Aims: To assess the efficiency of the army psychiatric hospital at restoring patients to full active duty. To assess whether a new military training and rehabilitation unit (MTRU) that emphasises military-skills training, improves outcome. Method: A 2-year, inception-cohort outcome study of hospital in-patients. A 12-month, case-matched, ‘before and after’ outcome study compared MTRU patients with hospital in-patients. Results: I (hospital in-patients, n=309): at 2-year follow-up 67 (22%) were fully fit for active duty. Military psychiatrists' success rate at predicting recovery to active duty was 27%. 2: the odds of a soldier in the MTRU cohort (n=35) returning to active duty were 14 times greater than for the hospital cohort (n=35). The odds of remaining in the army while unfit for active duty were 20 times less for the MTRU than for the hospital cohort. Conclusions: The army hospital is inefficient at rehabilitation to active duty. The MTRU significantly increased the odds of returning to active duty and reduced the odds of remaining in the army while still unfit. These findings may be applicable to the emergency services.