With the admission of people who experience psychiatric disabilities in the state-federal vocational rehabilitation system and the Social Security disability rolls in the 1960s, assessment of their capacity to work has been a major concern. Given the rising rates of claims for psychiatric disability in both the public and the private sectors, and the disappointing employment outcomes of people with psychiatric disabilities compared to those with other disabilities, there have been numerous initiatives to accurately assess their employment potential. Historically, such assessment within the Social Security Administration has relied upon evaluation of a person's medical impairment, but numerous studies suggest a weak relationship between measures of psychiatric diagnosis or symptoms and work outcome. Efforts have been undertaken to identify valid and reliable methods of assessing the ability of people with psychiatric disabilities to work. The authors review (a) methods of assessing work function for this population, and (b) the literature on predictors of work functioning and the nature of psychiatric disability, and suggest implications for disability determination policies and for future research.