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Background: Evidence on treatment practice, discharge outcomes, and associated factors in patients with psychiatric disorders are rarely discussed in Ethiopia. Results from the available studies are also seldom consistent and miss important factors, including treatment-related variables. Therefore, this study intended to describe management practice and discharge outcome among adult psychiatric patients admitted to psychiatry wards of selected specialized settings in Ethiopia. By pointing out associated factors, this study will also provide insight on targets to improve discharge outcomes. Patients and methods: A cross-sectional study was conducted involving 278 adult psychiatry patients admitted to the psychiatry wards of Jimma Medical Center and St. Amanuel Mental Specialized Hospital in the study period from December 2021 to June 2022. The data was analyzed using STATA V.16. Descriptive statistics and logistic regression analysis were performed to present patient characteristics and identify factors associated with discharge outcome, respectively. In all the analysis, p value < 0.05 was used to declare statistical significance. Results: Schizophrenia (125, 44.96%) and bipolar disorders (98, 35.25%) were the top two psychiatric disorders diagnosed at admission. A greater share of patients with schizophrenia were treated with the combination of diazepam, haloperidol, and risperidone than with diazepam and risperidone, 14 (5.04%) each. Patients with bipolar disorder were being treated primarily with the combination of diazepam, risperidone, and sodium valproate, or risperidone and sodium valproate, 14 (5.04%) each. Overall, 232 (83.4%) patients were on psychiatric polypharmacy. In this study, 29 (10.43%) patients were discharged unimproved, and this risk was significantly higher in those patients with a khat chewing habit (AOR = 3.59, 95% CI = 1.21–10.65, P = 0.021) than non-chewers. Conclusion: Psychiatric polypharmacy was found to be a common treatment approach in patients with psychiatric disorders. In the study, a little more than one-tenth of patients with psychiatric disorders were discharged without improvement. Hence, interventions targeting risk factors, especially khat use, should be undertaken to improve discharge outcomes in this population. [ABSTRACT FROM AUTHOR]