An assessment was undertaken of a routine telepsychiatry service in rural areas of a Canadian province as a follow-up to a pilot telepsychiatry project. Over two years, there were 546 consultations at the five participating general hospitals, although the level of use varied considerably between them. Health professionals expressed high satisfaction with the service. While there were equipment problems in 17% of all consultations in the second year, they did not seem to affect acceptance of the technique. A cost analysis comparing consultations provided by a visiting psychiatrist and telepsychiatry found a break-even point of 348 consultations a year. However, when use of the videoconferencing network for administrative meetings was considered, the break-even point was 224 consultations a year, substantially below the actual utilization of telepsychiatry. Telepsychiatry appeared to result in increased access to community mental health services, suggesting future increased demand for these. From the perspective of health authorities and health professionals, telepsychiatry proved to be a useful and sustainable addition to existing mental health services.