The purpose of this dissertation study was to identify the social processes guiding the experiences of stigma and occupational engagement (mental healthcare and community participation) for adults with serious mental illness. I employed an ethnographic approach to conduct this study. Aligned with the ethnographic approach, methods including interviews, fieldwork/participant observation, and document review were employed to collect data at two clubhouses in North Carolina. A total of eighteen adults with serious mental illness and sixteen clubhouse staff or service providers participated and their perspectives on the topics of interest, such as stigma and mental healthcare, were collected over a period of six months. Additionally, seven policy experts were interviewed to gather their perspectives on the influence of stigma on mental healthcare policies. Data were analyzed using open and focused coding along with analytic interpretation. The analysis led to generation of three papers that illustrate: 1) a social process (titled moral economics of occupations framework) conceptualizing occupations as assets and their relevance in maintaining institutional practices; 2) a conceptual framework highlighting the relationship between stigma, community participation, and mental healthcare policies; and 3) a social process (titled principle of gradient rationality) guiding experiences of stigma on an interactional level. Future research is required to assess validity and applicability of the proposed frameworks in different settings. Further, in order to address structural/institutional stigma, future research regarding marginalizing policies is required, as many adults with serious mental illness continue to struggle due to systemic issues, such as incarceration, unemployment, poverty, and homelessness.