Background: Outpatient-based treatments for patients suffering from chronic schizophrenia inadvertently exclude a significant proportion of subjects because they are often too poorly motivated to attend for treatment. In addition there are also concerns about whether the skills that are learnt in a hospital setting will generalise to situations when the individuals are at home. This study attempted to redress some of these potential deficiencies and followed on from an earlier local study which found that a community-based team met more of the needs of patients suffering from chronic schizophrenia. Method: Seventy-five patients suffering from chronic schizophrenia were allocated randomly to receive traditional outpatient-based or home-based rehabilitation from a clinical psychologist and an occupational therapist. They were assessed before and after 9 months of treatment on a range of clinical, social and quality of life outcomes. Distress to carers was also assessed. Readmission to hospital was recorded for each subject. Results: There were significant reductions in socially embarrassing behaviour (SBS), increases in interpersonal functioning and recreational activities and a trend for quality of life to improve in the home-based group. There were fewer admissions in the home-based group but the differences, although financially substantial, were not statistically significant. Conclusions: The home-based rehabilitation service was well received by the majority of patients suffering from chronic schizophrenia and led to some improvement in social behaviour, interpersonal functioning, recreational activities and quality of life.