We examined prospectively factors influencing social and occupational disability and social adjustment among patients with major depressive disorder. The Vantaa Depression Study comprises a cohort of psychiatric inpatients and outpatients with major depressive disorder in the city of Vantaa, Finland. We prospectively interviewed 193 of 269 (72%) patients both 6 and 18 months after baseline. Axis I and II diagnoses were assessed via semistructured WHO Schedules for Clinical Assessment in Neuropsychiatry 2.0 and SCID-II interviews. Global disability and social and work adjustment were assessed. Patients’ functional disability and social adjustment were alleviated concurrently with recovery from depression during the follow-up. The current level of functioning and social adjustment of a patient with depression was predicted by severity of depression, recurrence before baseline and during follow-up, lack of full remission, and time spent depressed. Comorbid psychiatric disorders, personality traits (neuroticism), and perceived social support had significant influence.