Very few useful measures of service functioning are as yet available for the evaluation of mental health services. Continuity of care has been identified as "the strategic first choice" for the development of such process measures. The term "continuity" has been used to refer to a variety of important aspects of service functioning, including whether services maintain contact with patients, whether patients consistently see the same staff, success of transfer between services, degree to which plans for services are followed through, integration between service providers, and comprehensiveness in meeting patient's individual needs. In this paper, we reviewed the main theoretical definitions of continuity of care for the severely mentally ill, and discussed the work that has attempted to operationalise these definitions and to apply them in the study of mental health services. We concluded that whilst continuity of care has had a central place in theoretical discussions of community service planning, progress in developing and applying practical measures has so far been sporadic and limited. Obstacles to such research have included great diversity in definitions of continuity and the confounding influence of individual patient characteristics on the relationship between service process and outcome. Despite these limitations, research in this field has indicated that developing and applying measures of continuity of care may be feasible and produce useful results with findings of some of the studies suggesting a relationship between continuity of care and individual outcome.