Purpose-The purpose of this paper is to examine the recovery environment of a sub-acute residential mental health service. Such services are increasingly filling a gap in the continuum of care for people with recurrent mental illness and have a major role supporting the processes of recovery. Design/methodology/approach-A cross-sectional design was used with clients and staff completing the recovery enhancing environment measure. Nine clients who had entered the service from the community (step-up), 18 who had transferred from an inpatient unit (step-down) and ten staff completed the measure. Findings-Clients and staff rated the organisational climate of the service positively, with the role of caring staff being identified as particularly valuable. Clients and staff had similar positive views on the importance of recovery-based elements and rated the service as performing well in these areas. Step-up clients identified performance gaps in the areas of self-management, general health, personal strengths, and personal relationships. Step-down clients identified a range of gaps, including meeting basic needs, empowerment, and fundamental recovery processes. Practical implications-An assessment of the perceptions of clients and staff can allow services to identify differences in the attitudes of each group and ascertain areas in which the service can be improved to better meet the needs of individual clients. This may include being responsive to the setting from which clients have entered the service. Originality/value-This is the first study that has examined the recovery environment of a residential mental health service and how it meets the recovery needs of both step-up and step-down admissions.