Studies have shown that modifications to the physical environment of psychiatric institutions are associated with positive changes in patients' behaviour, attitudes and perceptions. However, little attention has been paid to the impact such modifications to the physical environment have on the nursing staff. The building of two completely new wards at a rural psychiatric hospital provided an opportunity to examine this issue. Measures of the nursing staffs' observed behaviour and self-ratings of burnout and job satisfaction were obtained in both the old and the new wards. The results showed that the new wards were associated with largely positive changes in behaviour and increased burnout, but there was no change in job satisfaction. However, it was clear that a vital component in the success of any environmental manipulation is an appropriate, corresponding change in the organizational climate.