This article discusses some of the challenges that occupational therapists working in acute psychiatric inpatient settings commonly face. There is often a lack of sufficient time available for treatment as well as limitations inherent in addressing functional problems in the artificiality of a hospital environment. A theoretical framework is introduced from which the role of occupational therapy and realistic objectives for acute short-term care can be identified. This framework for inpatient occupational therapy practice is based on the concept of activities health, which provides a definition of health in functional rather than medical terms. The importance of emphasizing the patient’s competence in roles assumed in community living is emphasized. A step-by-step approach to program development with specific examples is also provided.