People living with severe and persistent mental illness (SPMI) constitute a small yet highly vulnerable group within mental health care. Their care raises complex ethical challenges due to factors such as the intensity of their conditions, limited social support, communication difficulties, impaired decision-making, and, occasionally, disruptive behaviors. Despite these challenges, research on ethical issues in this population remains limited. This study explores the ethical considerations involved in providing care to individuals with SPMI, including end-of-life care. It examines the types of ethical dilemmas that arise, approaches used by care teams, decision-making processes, and ethical frameworks or practices applied in real-world settings. We conducted 73 qualitative interviews with a diverse group of participants, including care recipients, family members, caregivers, care managers, and subject-matter experts in the Flemish region of Belgium. The interviews were analyzed using content analysis to identify recurring themes and ethical practices. Although many institutions have formal ethics resources, such as guidelines or committees, these are often unfamiliar to frontline staff or perceived as difficult to access. Ethical dilemmas are mostly managed at the team level, with some organizations employing ethics reference persons, peer support mechanisms, or informal discussion forums (“ethics pubs”). Euthanasia was the most frequently discussed ethical issue. Other concerns included neglect in home care, delays in palliative care initiation, and safeguarding autonomy. Resource allocation, both at organizational and societal levels, also emerged as a significant concern. Caregivers reported tensions between individualized care and institutional rules, while families emphasized collective responsibility in making care decisions. Providing ethical care for individuals with SPMI requires careful attention to autonomy, collaboration, and fair resource distribution. Enhancing access to ethical support structures and adopting tailored approaches can help reconcile recovery-focused and palliative care needs, ensuring dignity and respect for this vulnerable population.