Combat exposure is associated with subsequent mental health symptoms, but progression to mental health disability is unclear. Army soldiers discharged with mental health disability (n = 4,457) were compared to two matched control groups: other disability discharge (n = 8,974) and routine discharge (n = 9,128). In multivariate logistic models, odds of mental health disability discharge versus other disability and routine discharge were significantly higher for soldiers deployed to combat zones; odds ratios increased with deployment time. Prior mental health hospitalization decreased these odds, though they remained significantly elevated. Mental health hospitalization with successful treatment may facilitate better coping during deployment. The frequency of disability after mental health hospitalization suggests remaining gaps in deployment-related mental health assessment and treatment.