Little is known about poverty trends in people with severe mental illness (SMI) over a long time span, especially under conditions of fast socioeconomic development. This study aims to unravel changes in household poverty levels among people with SMI in a fast-changing rural community in China. Two mental health surveys, using ICD-10, were conducted in the same six townships of Xinjin county, Chengdu, China. A total of 711 and 1042 people with SMI identified in 1994 and 2015, respectively, participated in the study. The Foster-Greer-Thorbecke poverty index was adopted to measure the changes in household poverty. These changes were decomposed into effects of growth and equity using a static decomposition method. Factors associated with household poverty in 1994 and 2015 were examined and compared by regression analyses. The proportion of poor households, as measured by the headcount ratio, increased significantly from 29.8% in 1994 to 39.5% in 2015. Decomposition showed that poverty in households containing people with SMI had worsened because of a redistribution effect. Factors associated with household poverty had also changed during the study period. The patient's age, ability to work and family size were of paramount significance in 2015. This study shows that the levels of poverty faced by households containing people with SMI has become more pressing with China's fast socioeconomic development. It calls for further integration of mental health recovery and targeted antipoverty interventions for people with SMI as a development priority.