BACKGROUND: The process of deinstitutionalization (community-based care) has been shown to be associated with better quality of life for those with longer-term mental health problems compared to long stay hospitals. This project aimed to investigate the relationship between national progress towards deinstitutionalization and (1) quality of longer-term mental health care (2) service users' ratings of that care in nine European countries. METHODS: Quality of care was assessed in 193 longer-term hospital- and community-based facilities in Bulgaria, Germany, Greece, Italy, the Netherlands, Poland, Portugal, Spain and the UK. Data on users' ratings of care were collected from 1579 users of these services. Country level variables were compiled from publicly available data. Multilevel models were fit to assess associations with quality of care and service user experiences of care. RESULTS: Significant positive associations were found between deinstitutionalization and (1) five of seven quality of care domains; and (2) service user autonomy. A 10% increase in expenditure was associated with projected clinically important improvements in quality of care. CONCLUSIONS: Greater deinstitutionalization of mental health mental health services is associated with higher quality of care and better service user autonomy.