This study examines the ability to acknowledge the need for treatment of mental illness and substance abuse problems among dually-diagnosed inpatients before and after an inpatient substance abuse treatment program. A cohort of 264 consecutively admitted patients diagnosed with a mental illness and substance use disorder were entered into a dual diagnosis treatment program. Perceptions of patients diagnosed with a substance-induced mental disorder were compared to those of patients with a primary mental illness regarding their problems and need for treatment before and after the dual diagnosis program. Most patients acknowledged a substance abuse or mental illness problem and need for treatment. Patients with substance-induced mental disorders were more likely to acknowledge a substance use problem and need for treatment (p < .001). After treatment, changes in perception of mental illness were greater for substance-induced mental disorder patients compared to patients with a primary mental illness (p < .001). Persons with more severe substance abuse were more likely to acknowledge a problem and need for treatment. The majority of dually-diagnosed patients admitted with a substance use disorder agreed that substance use was a problem, suggesting that inpatient hospitalization presents a prime opportunity to address addiction in dually-diagnosed patients. The type of mental illness and severity of substance use influenced perceptions of illnesses and treatment readiness and must be considered by the clinician.