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Background: Serious mental illness (SMI) with psychiatric instability accounts for disproportionately high use of emergency room visits and hospitalizations., Aim: To evaluate the effectiveness of an automated telehealth intervention supported by nurse health care management for improving psychiatric illness management and reducing acute service use among individuals with SMI and psychiatric instability., Methods: Thirty-eight individuals with SMI received the automated telehealth intervention for 6 months. Psychiatric symptoms, illness self-management, and self-reported service use (emergency room visits and hospital admissions) were collected at baseline, 3- and 6-months. Measures of quality of life, health indicators, and subjective health status were also collected., Results: Participants demonstrated improvements in self-reported psychiatric symptoms and illness self-management skills, an 82% decrease in hospital admissions (from 76 to 14 hospitalizations, p < 0.001) and a 75% decrease in emergency room visits (from 63 to 16 visits, p < 0.001). Improvements were also observed in quality of life, severity of depressive symptoms, and mental health status., Conclusion: These highly promising findings support the use of an automated telehealth device monitored by a nurse care manager for people with SMI, and highlight the potential for cost savings through reductions in acute health care utilization.