BACKGROUND: Democratic therapeutic community (DTC) treatment has been used for many years in an effort to help people with personality disorder. High-quality evidence from randomised controlled trials (RCTs) is absent. AIMS: To test whether DTC treatment reduces use of in-patient services and improves the mental health of people with personality disorder. METHOD: An RCT of 70 people meeting DSM-IV criteria for personality disorder (trial registration: ISRCTN57363317). The intervention was DTC and the control condition was crisis planning plus treatment as usual (TAU). The primary outcome was days of in-patient psychiatric treatment. Secondary outcomes were social function, mental health status, self-harm and aggression, attendance at emergency departments and primary care, and satisfaction with care. All outcomes were measured at 12 and 24 months after randomisation. RESULTS: Number of in-patient days at follow-up was low among all participants and there was no difference between groups. At 24 months, self- and other directed aggression and satisfaction with care were significantly improved in the DTC compared with the TAU group. CONCLUSIONS: DTC is more effective than TAU in improving outcomes in personality disorder. Further studies are required to confirm this conclusion.