Although improving police responses to mental health crises has received significant policy attention, most encounters between police and persons with mental illnesses do not involve major crimes or violence nor do they rise to the level of emergency apprehension. Here, we report on field observations of police officers handling mental health-related encounters in Chicago. Findings confirm these encounters often occur in the "gray zone," where the problems at hand do not call for formal or legalistic interventions. In examining how police resolved such situations, we observed three core features of police work: (a) accepting temporary solutions to chronic vulnerability, (b) using local knowledge to guide decision making, and (c) negotiating peace with complainants and call subjects. Findings imply the need to advance field-based studies using systematic social observations of gray zone decision making within and across distinct geographic and place-based contexts. Policy implications for supporting police interventions are also discussed.