Formal observation of patients at risk is extremely common in acute psychiatric facilities. Effectively a form of physical containment, observation is resource-intensive, makes significant personal demands upon staff and skews the focus of nursing care towards the small group of patients judged to be most at risk. For patients, the experience of being observed is often less than therapeutic and, in some cases, counter productive. In this paper, the authors draw upon a variety of perspectives, including that of a psychiatrist and a service user. It is argued that the practice of formal observation is ineffective and may actually contribute to the poor state of UK acute psychiatric inpatient units, in terms of direct patient care, clinical decision-making and appropriate risk management. In a recent ‘commentary’ within this journal, the authors offered ‘engagement’ as an alternative to observation. In this paper, the meaning of engagement is refined and presented as a process of emotional and psychological containment of distress. The paper concludes that inappropriate over-use of formal observation as a custodial and defensive practice can contribute to a sense of dehumanization and isolation within acute psychiatric patients; engagement may provide a genuine (i.e. not just linguistic) alternative.