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In the context of UK policy to promote employment for people with disability as a means to greater social inclusion, this study investigated how people with severe mental health problems fare in existing supported employment agencies. The aim of the study was to identify factors associated with successful placement in work and to test the impact of working on psychological well-being in this group. One hundred and fifty-five users of six English agencies were followed up for 1 year (2005–2006). Information was collected about their employment status, job-seeking behaviour, perceived obstacles to work, self-esteem and hope, and the employment support received. Eighty-two per cent of those working at baseline were still in work a year later. The support agencies helped 25% of unemployed clients into work, a statistically significant increase in the proportion of clients in employment. Gaining employment was associated with improvements in financial satisfaction and self-esteem. There was a trend towards working half time. People who had been out of work longer were less likely to secure employment. No significant associations were found between getting a job and personal characteristics, the quantity of employment support given, nor the recipient's rating of the support offered. The odds of moving into work were nearly four times higher for those people who visited a job centre prior to the start of the study. Clients of specialist agencies rated their provision more highly than clients of pan-disability agencies. These results demonstrate the benefits of working for this group and support the development of employment services with an individualised, rapid placement approach, linked to job centre advice and expert mental health service input. This is consistent with the Individual Placement and Support model, and highlights in addition the importance of job centres for its implementation in England. [ABSTRACT FROM AUTHOR]