We performed a pilot study examining the patterns of recovery from severe mental illness in a model integrated service delivery system using measures from the Milestones of Recovery Scale (MORS), a valid and reliable measure of recovery outcomes which ranges from 1 to 8 (8 levels). For purposes of presentation, we constructed an aggregate MORS (6 levels) where the levels are described as follows: (1) extreme risk; (2) unengaged, poorly self-coordinating; (3) engaged, poorly self-coordinating; (4) coping and rehabilitating; (5) early recovery, and (6) self reliant. We analyzed MORS data on individuals followed over time from The Village in Long Beach, California (658 observations). Using Markov Chains, we estimated origin-destination transition probabilities, simulating recovery outcomes for 100 months. Our models suggest that after 12 months only 8% of “extreme risk” clients remain such. Over 40% have moved to “engaged, poorly self-coordinating.” After 2 years, almost half of the initial “extreme Risk” clients are “coping/rehabilitating”, “early recovery” or “Self reliant.” Most gains occur within 2 years.