The purpose of the study was to develop a grounded theory about individuals' perception of the situation of being a psychiatric patient. Thirty-five inpatients (19 males, 16 females), ages 18 to 68, in two psychiatric units of an urban, public facility were interviewed on a biweekly basis from admission to discharge. Data were analyzed using the constant comparative method, and the data indicated that participants used the basic social process of managing self-worth to deal with the stigmatizing social predicament of being a mental patient. Events occurring before admission that shaped their responses were substance abuse, medication noncompliance, and the lack of social capital, which led to norm violations and subsequent hospitalization. Six attribution categories emerged: problem, disease, crisis, punishment, ordination, and violation. Findings support the need for professionals to improve their practice by acknowledging the effects of patients' subjective assessments on their response to hospitalization and by placing more emphasis on assisting patients to deal with the stigmatizing effects of a psychiatric diagnosis.