This essay examines the concept and limitations of deinstitutionalization as a principle and practice derived from Western paradigms, and how it has been problematically implemented in non-Western settings, including the Israeli-occupied West Bank. It begins by reviewing the international literature on deinstitutionalization of people with mental health illnesses/disabilities. It then examines the Palestinian experience with deinstitutionalization in the West Bank with an eye to its many limitations, in order to propose alternatives to successfully relocate people with mental health disabilities from hospitals to their communities, and to ensure for them a dignified life. The essay ends with an emphasis on this need in the Israeli-occupied Palestinian territories given the ongoing daily reality of Israeli military occupation and apartheid, which have had dire effects on Palestinians’ mental health.