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Moderating effects of social cognition in the relationship between the severity of history of child physical abuse (CPA) and social functioning were examined using 12-month longitudinal data among 143 participants with severe mental illness (SMI) in an inpatient psychiatric rehabilitation program. The adverse effects of the severity of history of CPA on social functioning were compensated for by greater social inference and lower external locus of control. Specifically, despite the severity of history of CPA, individuals with intact or greater social inference showed greater social functioning than did those with lower social inference. The decrease in externality, regardless of the history of CPA, seemed to be therapeutic for individuals with SMI. Considering the heterogeneity in both SMI and CPA, the current finding sheds light on providing trauma-informed, individualized treatment and assessment planning for individuals with SMI and a history of CPA.