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Although some clinicians believe many serious mental illnesses (e.g., schizophrenia) are incurable, research shows that individuals diagnosed with these disorders undergo a multidimensional recovery process where recovery is possible. Part of recovery may entail a change in identity. Some individuals diagnosed with mental illness undergo a delabeling process during recovery whereby they shed the label of being mentally ill, or relegate that part of their identity to a position of lower importance. Using an approach at the intersection of criminology and the sociology of health, I use labeling theory and recovery capital to explore the ways in which such a delabeling process becomes possible for some individuals with mental illness but not others. Recovery capital encompasses a variety of sociocultural factors that influence recovery in both positive and negative ways (e.g., experiences with the criminal justice system, prior vocational/educational experience). Through interviews with individuals formally diagnosed with mental illness who have been ordered to participate in a treatment program, the study will examine if there are positive forms of recovery capital that enhance one’s recovery through the maintenance of delabeling, and if there are negative forms of recovery capital that undermine one’s recovery by preventing the delabeling process from occurring.