Critics of labeling theory vigorously dispute Scheff's (1966) provocative etiological hypothesis and downplay the importance of factors such as stigma and stereotyping. We propose a modified labeling perspective which claims that even if labeling does not directly produce mental disorder, it can lead to negative outcomes. Our approach asserts that socialization leads individuals to develop a set of beliefs about how most people treat mental patients. When individuals enter treatment, these beliefs take on new meaning. The more patients believe that they will be devalued and discriminated against, the more they feel threatened by interacting with others. They may keep their treatment a secret, try to educate others about their situation, or withdraw from social contacts that they perceive as potentially rejecting. Such strategies can lead to negative consequences for social support networks, jobs, and self-esteem. We test this modified labeling perspective using samples of patients and untreated community residents, and find that both believe that "most people" will reject mental patients. Additionally, patients endorse strategies of secrecy, withdrawal, and education to cope with the threat they perceive. Finally, patients' social support networks are affected by the extent to which they fear rejection and by the coping responses they adopt to deal with their stigmatized status.