Purpose: The importance of the relationship or therapeutic alliance to outcome is well established in research on services to serious mental illness (SMI). Less is known, however, about factors that contribute to more favorable client-clinician relationships, particularly with regard to clinician-level attitudes and behaviors. This presentation details the results of a study of the relationship between clinician optimism about the potential for client improvement and the quality of the relationship between clinicians and clients with SMI. Method: Clinician-client dyads consisting of 128 focal clients with mental health problems clustered within 43 case managers were surveyed in a large, urban public mental health clinic, as part of a multi-site study of treatment pressures in mental health. The focal dependent variable was the case management relationship, assessed during the interview with the focal client using Yamaguchi's Client-Case Worker Relationship measure, which contains subscales to capture positive relationship dimensions, as well as negative relationship features such as conflict and resentment. Independent variables included: an optimism scale completed by case managers about the focal client; the Global Assessment of Functioning, rated by the study interviewer; and diagnoses abstracted from agency records. Using hierarchical linear modeling to partition within-clinician variance, the relationships between clinician-reported optimism about the clientís future functioning and client-assessed quality of relationship (positive and negative subscales), controlling for global functioning and diagnosis, were modeled. Results: Analyses indicated that clients were less likely to report having a positive relationship and more likely to report having a negative relationship with the case manager when that case manager reported being pessimistic about the client's potential for future independent functioning. These relationships remained significant when the potentially confounding influence of clinician effects, current level of client functioning, and psychiatric diagnosis were controlled. Implications for Practice: Clinician pessimism about the client's potential for positive future functioning may be communicated to the client through clinical interactions, impeding the development of positive relationship qualities and contributing to relationship conflict and tension between clients and case managers. These findings suggest that training efforts designed to increase clinician optimism may yield positive effects on the quality of therapeutic relationships in services for SMI clients.