Objective: The aim of this study was to compare the effectiveness of three treatment models for personality disorder: 1) a long-term psychoanalytically oriented residential specialist program, 2) a phased "step-down" specialist psychosocial program that included a briefer residential stay and an outpatient component, and 3) a general community psychiatric model. Method: One hundred forty-three patients with a personality disorder diagnosis were allocated according to geographical criteria to the three treatment conditions. Outcome was prospectively evaluated at 6, 12, and 24 months through the use of a standardized battery of instruments that included measures of general symptom severity, social adaptation, assessment of mental health functioning, frequency of self-harm and suicide attempts, and rates and duration of hospital readmissions. Results: By 24 months, patients in the step-down condition showed significant improvements on all measures. Patients in the long-term residential model showed significant improvements in symptom severity, social adaptation, and global functioning, while no changes were achieved in self-harm, attempted suicide, and readmission rates. Patients in the general psychiatric group showed no improvement on any variables except self-harm and hospital readmissions. Conclusions: The results of this study suggest that for personality disorders, a specialist step-down program is more effective than both long-term residential treatment and general psychiatric treatment in the community. Replication is needed that includes a random allocation of patients to conditions to ensure that geographical factors did not account for the observed differences.