Dual diagnosis is chronic psychiatric condition involving serious mental illness and substance abuse. Experts recommend the integration of treatment for concurrent substance abuse and serious psychiatric problems. The following pragmatic trial examined the implementation and outcomes of cognitive milieu therapy (CMT) among a group of dual diagnosis inpatients. CMT is an integrated treatment for both mental illness and substance abuse based on cognitive behavioral principles and carried out within a supportive inpatient environment. A convenience sample of dual diagnosis inpatients (N = 136) was assessed pre- and post-intervention from an inpatient setting where CMT was the mode of treatment. Psychopathology was measured using the Brief Psychiatric Rating Scale and substance abuse measured with the DrugCheck scale, breath/urine samples, and the Severity of Dependence Scale. Functioning was assessed with the Global Assessment of Functioning scale. Inpatient treatment was typically 3 to 9 months long. Ratings from independent sources post-intervention revealed that inpatients showed a significant reduction in both psychiatric symptoms (p < .0001) and levels of substance abuse. Patients also reported significant reductions in levels of anxiety and depressive symptoms (p < .0001). Treatment fidelity was considered adequate, where at least 80% of patients received all the core elements of the intervention. CMT is a promising treatment for dual diagnosis populations and warrants further controlled studies to evaluate its effectiveness in a range of clinical settings.