Psychological trauma and post-traumatic stress disorder (PTSD) are prevalent among adults with severe mental illness, but their impact on the psychosocial and physical health-related impairment of women with major mental illnesses is not known. A sample of 35 low-income urban women receiving community mental health services for severe and chronic mental illness was assessed with psychometrically validated structured interview instruments for psychiatric diagnosis, lifetime history of exposure to traumatic stressors, PTSD, substance use, health-related impairment, and complex psychosocial problems. Exposure to multiple types of traumatic stressors was reported by 98% of respondents, and more than half met criteria for lifetime PTSD (44% for current PTSD). Current PTSD prevalence was highest (>56%) when traumatic loss, sexual abuse, physical abuse, traumatic assault, or community violence were reported. A history of childhood sexual abuse or PTSD or both were associated with use of multiple substances and complex psychosocial problems. Assessment and treatment of complex PTSD appears warranted in psychiatric intensive care and community aftercare for women with severe mental illness.