The systemic relationship between criminal justice and mental healthcare systems is fundamentally inadequate while mentally ill individuals are overrepresented among incarcerated populations around the world. This trend reflects the widespread failure to provide accessible mental healthcare in prisons, often leaving criminal justice systems to manage what should be public health concerns. In particular, the United States punitive carceral model exacerbates mental health conditions among its incarcerated population. By contrast, Finland’s rehabilitative approach, coupled with robust community resources, helps support prisoners during incarceration and ease their transition back into society. Although these two systems reflect distinct cultural values and welfare structures, individuals with both a criminal record and a mental illness are subjected to dual stigmatization. Dual stigma, perpetuated by institutions and societal attitudes, limits access to essential opportunities such as equitable housing, education, and social services for these individuals upon release, further marginalizing them from society. Despite Finland’s robust support services both during and after incarceration, Thornberry and Krohn’s (2001) interactional theory and social labeling reinforce the significant barriers that for successful reintegration. This is the first study to examine the long-term impacts of dual stigmatization comparatively between Finland and the United States. The findings provide insights that both support and challenge the hypothesis that dual stigmatization creates lasting social and economic barriers, irrespective of welfare state differences, making successful reintegration profoundly challenging and increasing one’s risk of recidivism. The results suggest that Finland’s carceral model provides greater opportunities for effective rehabilitation of inmates with mental health conditions than the United States. The U.S. should adopt similar policies and strategies to improve reintegration outcomes and reduce recidivism rates. Enhanced collaboration between criminal justice and mental healthcare systems in the U.S. is essential to bridging existing gaps, supporting effective reintegration, and addressing systemic barriers faced by formerly incarcerated individuals with mental illnesses.