To compare the post-discharge outcomes of people admitted to community-based residential mental health rehabilitation facilities subject to a Community Treatment Order (CTO) who do and do not have this order discontinued prior to discharge. People subject to a CTO who were admitted across five Community Care Units (CCUs) in Queensland, Australia between 2005 and 2014 (N = 311), were grouped based on involuntary treatment status at the time of their discharge. Individuals whose status changed to voluntary (n = 63; CTO > VOL) were compared with those whose treatment remained involuntary (n = 248; CTO-CTO) on demographic, clinical and treatment-related characteristics. Group-level and individualised changes were assessed between the year pre-admission and the year post-discharge. The primary outcome measure was change in mental health and social functioning (Health of the Nation Outcome Scale). Secondary outcomes included disability (Life Skills Profile-16), service use, accommodation instability, and involuntary treatment. Logistic regression was completed to examine predictors of CTO discontinuation during CCU care. Potential predictors covered service-, consumer-, and treatment-related characteristics. Compared to the CTO-CTO group, the CTO > VOL group had significantly longer episodes of CCU care, more frequent primary diagnoses of schizophrenia spectrum disorders, and were more likely to be female. Following discharge, CTO > VOL subjects had more frequent reliable and clinically significant improvement in HoNOS scores, as well as more frequently demonstrated reliable improvement in hospital bed use and accommodation instability than the CTO-CTO subjects. CTO discontinuation was predicted by longer duration of CCU care, being a female, and having a smaller number of psychiatry-related bed use prior admission. Our findings suggest that CCU care of sufficient duration may lessen the need for subsequent compulsory treatment in the community.