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In this study we sought to understand the relationship between obtaining competitive employment and changes in nonvocational domains of functioning (symptoms, substance abuse, hospitalizations, self-esteem, quality of life) in persons with severe mental illness. A group of 143 unemployed patients participating in a study of vocational rehabilitation programs were assessed in nonvocational areas of functioning at baseline and 6, 12, and 18 months later. Statistical analyses examined the relationship between work status at the follow-up assessments and nonvocational functioning, controlling for baseline levels of nonvocational variables. Patients who were working at follow-up tended to have lower symptoms (particularly thought disorder and affect on the Brief Psychiatric Rating Scale), higher Global Assessment Scores, better self-esteem, and more satisfaction with their finances and vocational services than unemployed patients. Employment is associated with better functioning in a range of different nonvocational domains, even after controlling for baseline levels of functioning.