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Objective: Serious mental illnesses (SMI) often occur during early adulthood, just as young people are developing important aspects of their identity that can affect their recovery. Positive ethnic identity development is associated with stress coping and psychological well-being in young people. But, there is limited research to indicate how individual experiences of belonging and attachment to one's ethnic group influence personal recovery processes among young adults living with SMI. Method: Young adults living with SMI (95% identified as ethnic/racial minorities) were recruited from four outpatient psychiatric rehabilitation programs (N = 83). Multivariate regressions were used to examine relationships between predictors (demographics, psychiatric symptomatology, ethnic identity) and the dependent variables (perceived stress and personal recovery). Results: A stronger, more developed ethnic identity and fewer depressive symptoms were associated with higher ratings of personal recovery. Increases in psychiatric symptoms predicted increased perceived stress. Post hoc analyses showed that Black, Latino/a, and multiracial study participants' ethnic identity ratings were similar to those of same ethnic/racial group of young adults without SMI. Conclusions and Implications for Practice: Ethnic identity development could be a significant psychosocial factor shaping mental health recovery among minority young people living with SMI. Several factors associated with psychological well-being among ethnic and racial minority youth may account for this, including adaptive coping, social support, and a buffering effect against racism. Our findings indicate that assessing and developing a young person's ethnic identity-related strengths and resources as a means for improving the personalization of recovery services and enhancing the quality of care. Impact and Implications: This study is one of the first to examine the relationship between ethnic identity and important psychological outcomes of stress and personal recovery among young adults with SMI. Results show that young adults with a sense of attachment and belonging to their ethnic groups report significantly higher personal recovery, suggesting that ethnic identity could play an important role in reducing mental health disparities among minority young adults with SMI. [ABSTRACT FROM AUTHOR]