This study was a randomized effectiveness trial of the use of incentives to improve treatment retention and post-treatment outcomes among parolees in community treatment. Parolees entering community treatment were randomized to incentives (N = 104) or brief education (N = 98). It was hypothesized that the use of incentives to increase treatment retention would result in improved post-treatment outcomes (i.e., arrest, employment, and drug use), but at 18 months post-intake, there were no group differences for any outcome. In secondary analyses, rearrest by 18 months post-intake was predicted by substance use, greater number or severity of psychological symptoms, treatment non-completion, unemployment, and younger age. Contrary to expectations, results indicated that participants who received incentives for attendance had arrest, employment, and drug use outcomes similar to those who received a brief education session. Our findings, in concert with those of several other researchers, suggest that there may be certain populations or settings where incentives may not be effective.