This study aims to examine the impact of perceived workplace discrimination (PWD) on the recovery of people with mental illness (PMI). Grounded in social cognitive theory, it was hypothesized that PWD is associated with poorer clinical, functional, and personal recovery through the underlying mechanisms of self-stigma, organizational justice, and psychological capital (PsyCap). A total of 265 employed PMI in Hong Kong, diagnosed with anxiety, depression, schizophrenia, bipolar disorder, or other psychotic disorders, completed a structured questionnaire assessing PWD, self-stigma, organizational justice, PsyCap, symptom remission, functional restoration, and personal recovery. Serial mediation analysis revealed that PWD had an indirect association with all three recovery outcomes through the mediating factors of self-stigma, organizational justice, and PsyCap. Specifically, PWD was found to be linked to worsened recovery by exacerbating PMI's endorsement of negative stereotypes and prejudicial attitudes, reducing their perceptions of organizational justice, and subsequently depleting their psychological resources. This study provides initial evidence that discrimination against PMI in the workplace significantly hinders their recovery. The findings underscore the crucial role of organizational justice in fostering PsyCap, which in turn facilitates the recovery of PMI. Employers and managers are encouraged to prioritize addressing workplace discrimination and maintaining a fair and just work environment.