The opportunity for diverting offenders with mental illness and substance abuse disorders from the criminal justice system when they have their first appearance in a municipal court is explained. Sections of this publication include: introduction; Sequential Intercept Model (SIM); municipal courts-definition and caseloads; municipal courts as a venue for diversion of people with mental and substance use disorders; challenges to the use of municipal courts for diversion-case volume, time constraints and lack of leverage, and the mature of municipal courts; what the essential elements for effective diversion are-identification and screening, court-based clinician as the boundary spanner-linkage component, recovery-based engagement strategies, and proportional response; a municipal court achieving effective diversion-Seattle Municipal Mental Health Court; a municipal court achieving effective diversion-Midtown Community Court in New York City; a municipal court achieving effective diversion-Misdemeanor Arraignment Diversion Project in New York City; and summary. "Municipal courts that implement these four essential elements-Identification and Screening, Court-Based Clinician, Recovery-Based Engagement, and Proportional Response-are in the position to minimize the criminal justice system involvement and reduce unnecessary incarceration of people with mental illness and co-occurring substance use disorders as well as facilitate engagement or re-engagement in mental health and substance use disorder services" (p. 12).