To explore the management and outcome of COVID-19 infection in mental illness at a specialized neuropsychiatric setting. A retrospective review of the clinical profile of 100 COVID-19 patients with mental illness, admitted to the Psychiatric COVID unit (PCU) from June 2020 to June 2022, was done, with a subgroup analysis of chronic institutionalized patients (n = 36). Schizophrenia, bipolar affective disorder, and schizoaffective disorder comprised 64% of the study population. Most patients (87%) were on antipsychotics. 56% of the patients had an infection of mild severity and 38% were asymptomatic. Corticosteroids and anticoagulants were given to 33.3% and 25% of the patients, respectively. 16% of the patients encountered medical complications in the PCU, and 14% were referred to a COVID-designated hospital. Patients with diabetes mellitus and/or hypertension were more likely to be referred. The chronic institutionalized patients (n = 36) had either an asymptomatic or mild infection. Three among these patients were referred to a COVID-designated hospital. Most psychiatric patients with medical illnesses, including COVID-19, pose unique challenges including complexity of symptoms, ensuring patient safety, and the need for trained professional staff to provide specialized psychiatric interventions, which can be taken care of in psychiatric care settings.