The psychiatric halfway house is a transitional residential service for people with mental illness. It can help them to restore a normal life through community living skills training in the house, and thereafter successfully achieve community integration. It is an important social service component for the realization of community mental rehabilitation. This article introduced the developmental history and current situation of the psychiatric halfway house service in Hong Kong, and pointed out its strengths in terms of policy, organization, and service rationale. It also pointed out the practical challenges faced in the areas of discharge rate, professional manpower arrangement, and vocational rehabilitation training. Finally, based on the analysis of the experience of psychiatric half-way houses in Hong Kong, suggestions were made on the development of protective policy, organizational training, team building, and concrete services content for the development of the halfway house service in China.