The US criminal justice system has witnessed dramatic increases in its mentally ill population during the past 50 years. The decreasing number of psychiatric beds is one proposed cause and more psychiatric beds may be one solution.This study examined the relationships among large changes in local psychiatric bed capacity, local jail inmate populations, and the psychiatric burden at local general hospitals.The study used a kernel method to identify abrupt changes in psychiatric bed capacity using the American Hospital Association Survey and Medicare Provider of Services data. Data were aggregated to the hospital referral region-year level and matched to the National Inpatient Sample of hospital discharges 1988-2015 and the Annual Survey of Jails 1985-2014. Subsequent analysis by event study examined the effect of abrupt bed changes on numbers of jail inmates.Decreases in local psychiatric bed capacity were associated with an average increase of 256.2 jail inmates (95% confidence interval: 3.3-509.1). Increases in psychiatric bed capacity were associated with an average decrease of 199.3 jail inmates (95% confidence interval: -457.4 to 58.8). There was limited evidence for spillovers to general hospitals immediately following decreases in psychiatric beds.Decreases in local psychiatric bed capacity appear to be associated with subsequent increases in local jail populations. There was no clear evidence of treatment shifting from psychiatric units to local general hospitals. These findings support concerns that a consequence of reducing psychiatric inpatient bed capacity is an increase in the jail population due to more psychiatrically ill inmates, aggravating the challenge of psychiatric treatment delivery within the US criminal justice system.