Therapeutic community is a participative, group-based approach to long-term mental illness, personality disorders and drug addiction. The approach was usually residential, with the clients and therapists living together, but increasingly residential units have been superseded by day units. It is based on milieu therapy principles, and includes group psychotherapy as well as practical activities.

Therapeutic communities have gained some reputation for success in rehabilitation and patient satisfaction in Britain and abroad. In Britain, 'democratic analytic' therapeutic communities have tended to specialise in the treatment of moderate to severe personality disorders and complex emotional and interpersonal problems. The evolution of therapeutic communities in the United States has followed a different path with hierarchically arranged communities (or concept houses) specialising in the treatment of drug and alcohol dependence.
The term was coined by Thomas Main in his 1946 paper, "The hospital as a therapeutic institution",[3][4] and subsequently developed by others including Maxwell Jones, R. D. Laing at the Philadelphia Association, David Cooper at Villa 21, and Joshua Bierer.

Under the influence of Maxwell Jones, Main, Wilmer and others (Caudill 1958; Rapoport 1960), combined with the publications of critiques of the existing mental health system (Greenblatt et al. 1957, Stanton and Schwartz 1954) and the sociopolitical influences that permeated the psychiatric world towards the end of and following the Second World War, the concept of the therapeutic community and its attenuated form – the therapeutic milieu – caught on and dominated the field of inpatient psychiatry throughout the 1960s.

The first development of therapeutic community in a large institution took place at Claybury Hospital under the guidance of Denis Martin and John Pippard. Beginning in 1955 it involved over 2,000 patients and hundreds of staff.[5] The aim of therapeutic communities was a more democratic, user-led form of therapeutic environment, avoiding the authoritarian and demeaning practices of many psychiatric establishments of the time. The central philosophy is that clients are active participants in their own and each other's mental health treatment and that responsibility for the daily running of the community is shared among the clients and the staff. 'TC's have sometimes eschewed or limited medication in favor of group-based therapies.