There is growing recognition of the need to consider the effect of mental health treatments on functional independence/abilities, in addition to any effects on primary symptoms. A variety of performance-based measures of functional living skills have appeared in the medical literature over the past 25 years in discipline-specific journals, but there has been little attempt to synthesize this information to guide mental health clinicians and researchers in choosing among the available measures. Thus, the goal of the present review was (1) to identify and evaluate the strengths and weaknesses of currently available performance-based assessments of functional living skills for adult populations, and (2) to make specific recommendations regarding use of currently available instruments as well as recommendations for future instrument development. Through a comprehensive search of electronic citation databases for English-language articles on performance-based instruments, as well as via cross-referenced articles in the bibliography of each initially identified article, we identified 94 relevant articles covering 31 instruments, including 20 multi-domain instrument batteries, and 11 additional domain-specific performance-based instruments. Most identified instruments provided evidence of adequate reliability, but empirical data regarding the predictive validity of each scale in terms of actual "real world functioning" was less prevalent. Several good performance-based measures have been developed for individuals with dementia, psychiatric illnesses, and older healthy individuals. Future instrument development may benefit from a focus on brevity, empirical item selection as determined by patients/caregivers, predictive validity with an emphasis on change in functioning over time, and the relationship of performance to levels of competency required for the completion of everyday tasks.