In the field of welfare and health services for the aged and the disabled, a policy shift from institution-based services to community-based services has gradually introduced in Japan since the early 1980s. At the beginning of the 1980s, this policy shift tended to be seen as an outcome of “disability rights movement” in the 1970s. However, it is hard to remain as true in the 1990s. Now, it seems to be necessary to examine why and how the policy shift occurred.In the U.S., critical studies of the policy shift, deinstitutionalization, have already been made since the end of the 1970s. Based on these studies, the paper aims at clarifying the process of the policy change in mental health service provision in the U.S. The change can be attributed mainly to three factors : the professional interests of psychiatrists the ideas of anti-institution ; and financial incentives.Whether deinstitutionalization can be explained by ideological or financial factors is related to the question whether it is the liberation or the control of the mentally ill. In that sense, the deinstitutionalization process should be analyzed in the broad context of traditional debate on the role of the Welfare State.