Throughout the 1840s, a new philosophy of mental health care emerged in the United States. Known as Moral Treatment, the movement prompted the construction of asylums designed to provide humane, serene patient experiences. However, institutions like Danvers State Hospital and Blackwell’s Island, which were initially heralded for progressive treatment, ultimately mirrored prisons due to overcrowding, resource shortages, and systemic neglect. Drawing on Michel Foucault’s writings on panopticon theory and the work of modern prison abolition scholars like Mariame Kaba and Angela Davis, this paper analyzes institutional reports and exposés from the Moral Treatment period, revealing notable parallels between asylums and prisons. Dehumanizing conditions and negligent experimentation blurred the line between medical care and imprisonment, with marginalized groups bearing the brunt of these failures. Most harmed by these practices were immigrants and people in poverty, who were often housed in asylums due to fears of cultural contamination and overlaps in the welfare system. Examining the shortcomings of Moral Treatment offers insights into the criminalization of mental illness: academic discourse credits deinstitutionalization. This 1950s and 1960s reform movement closed long-stay psychiatric hospitals but failed to strengthen community-based care alternatives. The paper’s discussions contribute to a shift toward accessible and culturally informed reforms, prioritizing therapeutic interventions over punitive confinement.