No general consensus has emerged yet to explain why and/or how individuals with mental illness (MI) are influenced by the stigma of MI. In order to examine social, psychological processes involved in the influences of MI stigma, the proposed study aims, through structural equation modeling (SEM), to test a hypothesized path model that reconstructs modified labeling theory (MLT). The significance of the model is that (1) it hypothesizes self-esteem as a critical mediator in the process and (2) it adds a psychological mediator, affect, to the paths established by MLT to examine the psychological process of MI stigma. First, this proposed study aims to examine factors predicting self-esteem, conceptualized as two dimensions of attitude toward the self - i.e., Self-Deprecation and Self-Worth. Second, it aims to examine whether self-esteem plays a crucial role mediating the relationship between the background variables and the behavioral outcomes. The proposed study will also conduct exploratory data analyses to address the following questions: (1) How does consumers' self-esteem relate to the treatment environment (Moos, 1974) of the agency in which they are being treated? (2) What are the potential factors moderating relationships between background variables and self-esteem? (3) Are there differences in self-esteem and its consequences between groups, such as between males and females, Caucasian and non-Caucasian consumers, or consumers from rural versus urban areas? To achieve these aims, 450 community-living consumers in southeast Michigan will be recruited from 25 community-based mental health service agencies. Consumers will be surveyed in a semi-structured small group format and/or individually to collect information about their personal and mental health background characteristics, affects, beliefs, self-esteem, and behavioral outcomes. The proposed study will address some of the gaps in previous research by identifying psychological dynamics around affect, beliefs, and self-esteem involved in the process of MI stigma. Exploring more detailed mechanisms of MI stigma, it can have implications for intervention and prevention. The proposed exploratory analyses will provide testable hypotheses for future studies. The findings of the study could also provide useful information for future mental health service and policy development concerning individuals with Ml.