Background: Many people who are homeless with severe mental illnesses are high users of healthcare services and social services, without reducing widen health inequalities in this vulnerable population. This study aimed to determine whether an independent housing with mental health support teams with a recovery-oriented approach (Housing First program) in people who are homeless with severe mental disorders improves hospital and emergency department use. Methods: We did a randomized controlled trial in 4 French cities: Lille, Marseille, Paris, and Toulouse, including a cost effectiveness analysis. Participants were eligible if they were 18 years or older, being absolutely homeless or precariously housed, with a diagnosis of schizophrenia (SCZ) or bipolar disorder (BD), and were required to have a high level of needs (moderate-to-severe disability and past hospitalizations over the last 5 years or comorbid alcohol or substance use disorder. Using computer-generated random numbers, participants were randomly assigned (1:1) to immediate access to independent housing and support from the Assertive Community Treatment team (social worker, nurse, doctor, psychiatrist, and peer worker) (HF group) or treatment as usual (TAU group) namely pre-existing dedicated homeless-targeted programs and services. Participants and interviewers were unmasked to assignment. The primary outcomes were the number of emergency department (ED) visits, hospitalization admissions, and inpatient days at 24 months. Secondary outcomes were recovery (RAS), quality of life (SQOL and SF36), mental health symptoms (MCSI), addiction issues, stably housed days and cost savings from a societal perspective. Findings: Between August 2011and April 2014, 703 eligible patients were randomly assigned to the HF group (n=353) or TAU group (n=350). No differences were found in the number of hospital admissions (success rate difference [95% CI], -0.03 [-0.12 to 0.05]) or ED visits (-0.05 [-0.14 to 0.3]). Significant less inpatient days were found for HF versus TAU (-0.16 [-0.23 to -0.08]). HF group exhibited higher housing stability (standardized Beta, 20.2 [18 to 22.3]) and higher scores for some sub-dimensions of the SQOL scale (psychological well-being and autonomy). No differences were found for SF36, mental health symptoms, rates of alcohol or substance dependence. HF was associated with cost savings in healthcare costs (-0.21[-0.29 to -0.13]) and residential costs (-0.81[-0.85 to -0.77]). Interpretation: An immediate access to independent housing and support from an Assertive Community Treatment team resulted in decreased inpatient days and cost savings in people who are homeless with SCZ or BP disorders. Trial Registration: This study is registered with ClinicalTrials.gov, number NCT01570712. Funding Statement: French institutional grant from the Programme Hospitalier de Recherche Clinique National (DGOS), Janssen Pharmaceutical Company, and the Fondation de France. Declaration of Interests: All authors have completed the ICMJE uniform disclosure form at http://www.thelancet.com/forauthors/forms#icmje-coi, and stated that no conflicts of interest exist. Ethics Approval Statement: The local ethics committee (Comite de Protection des Personnes Sud-Mediterranee V, France: trial number 11.050) and the French Drug and Device Regulation Agency (trial number 2011-A00668-33) approved this study.