Despite the increase in consumer-driven interventions for homeless and mentally ill individuals, there is little evidence that these programs enhance psychological outcomes. This study followed 197 homeless and mentally ill adults who were randomized into one of two conditions: a consumer-driven "Housing First" program or "treatment as usual" requiring psychiatric treatment and sobriety before housing. Proportion of time homeless, perceived choice, mastery, and psychiatric symptoms were measured at six time points. Results indicate a direct relationship between Housing First and decreased homelessness and increased perceived choice; the effect of choice on psychiatric symptoms was partially mediated by mastery. The strong and inverse relationship between perceived choice and psychiatric symptoms supports expansion of programs that increase consumer choice, thereby enhancing mastery and decreasing psychiatric symptoms.