Purpose: This study was conducted to explore the mediating effect of self-efficacy in the relationship between internalized stigma and treatment adherence among community dwelling patient with mental illness. Methods: A cross-sectional study design was employed. Participants were 145 people with mental illness who were enrolled at one of 11 community mental health institutions in Busan, South Korea. Internalized stigma of mental illness, self-efficacy, treatment adherence, and socio-demographic data were examined. Data were collected using self-report questionnaires and analyzed using Baron and Kenny method. Results: Internalized stigma had a significant negative correlation with self-efficacy and treatment adherence. Self-efficacy had a significant positive correlation with treatment adherence. In addition, self-efficacy had a full mediating effect in the relationship between internalized stigma and treatment adherence. Conclusion: The results suggest that self-efficacy plays an important role in promoting treatment adherence among patients with mental illness who have high levels of internalized stigma. Therefore, mental health professionals should focus on reducing internalized stigma and also enhancing self-efficacy to increase treatment adherence for persons with mental illness living in the community.