To describe the tobacco industry's relationships with and influence on homeless and mentally ill smokers and organisations providing services to them. Analysis of internal tobacco industry documents and journal articles. The tobacco industry has marketed cigarettes to the homeless and seriously mentally ill, part of its "downscale" market, and has developed relationships with homeless shelters and advocacy groups, gaining positive media coverage and political support. Tobacco control advocates and public health organisations should consider how to target programmes to homeless and seriously mentally ill individuals. Education of service providers about tobacco industry efforts to cultivate this market may help in reducing smoking in these populations.