Telehealth implementation can be challenging for persons with serious mental illness (SMI), which may impact their quality of care and health outcomes. The literature on telehealth's impacts on SMI care outcomes is mixed, necessitating further investigation. We examined the impacts of facility-level telehealth adoption on quality of care metrics over time among patients with SMI. We analyzed Veterans Affairs (VA) administrative data across 138 facilities from January 2021 to December 2022. We performed longitudinal mixed-effects regressions to identify the relationships between the proportion of facility-level telehealth visits and SMI specialty care quality metrics: engagement with primary care; access and continuity of care across a range of mental health services including psychotherapy or psychosocial rehabilitation, SMI-specific intensive outpatient programs, and intensive case management; and continuity of mental health care after a high-risk event (eg, suicide attempt). Facilities with a higher proportion of telehealth visits had reduced access and continuity of physical and mental health care for patients with SMI (P<.05). Higher telehealth adoption was associated with reduced primary care engagement (z=-4.04; P<.001), reduced access to and continuity in SMI-specific intensive case management (z=-4.49; P<.001; z=-3.15; P<.002), reductions in the continuity of care within psychotherapy and psychosocial rehabilitation (z=-3.74; P<.001), and continuity of care after a high-risk event (z=-2.46; P<.01). Telehealth uptake initially increased access to intensive outpatient but did not improve its continuity over time (z=-4.47; P<.001). Except for continuity within SMI-specific intensive case management (z=2.62; P<.009), continuity did not improve over time as telehealth became routinized. Although telehealth helped preserve health care access during the pandemic, telehealth may have tradeoffs with regard to quality of care for some individuals with SMI. These data suggest that engagement strategies used by SMI-specific intensive case management may have preserved quality and could benefit other settings. Strategies that enhance telehealth implementation-selected through a health equity lens-may improve quality of care among patients with SMI.