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Research indicates that occupation is important for well-being in people with mental illness, but this has not been extensively studied among those with severe psychiatric disabilities. Social contacts may possibly play a more vital role for them. This study aimed to explore how aspects of occupation and social interaction were related with well-being factors in that group, while controlling for the influence of clinical factors. People with psychiatric disabilities living in congregate supported housing (CSH; N = 155) responded to questionnaires addressing occupation, social contacts and well-being aspects, such as subjective health, quality of life, self-mastery, and personal recovery. A comparison group with psychiatric disabilities who lived in an ordinary flat or house and received outreach housing support (N=111) completed the same instruments. The two groups were compared regarding their pattern of associations between occupation, social contacts, and well-being. Associations between occupation and well-being in the CSH group showed that general satisfaction with everyday occupations in particular was related to all aspects of well-being, whereas activity level and occupational balance were not related to well-being. The relationships were fewer and weaker, in comparison to the group in ordinary housing with outreach support. Indicators of social contacts were basically unrelated to well-being. The study contributes to occupational science by showing that the role of a high activity level for well-being, although important, should not be overemphasized. Future research should focus on narratives to get the voices of people residing in CSH and on exploration of how individually/socially performed occupations are associated with well-being.