Depression is associated with significant functional impairment and reduced quality of life. Disruptions occur both globally as well as in specific functional areas such as work, interpersonal relationships and cognitive function. From both a clinical and research perspective, much focus has been given to the resolution of symptoms associated with depression, while relatively little attention has been given to functional improvements. Definitions of remission in depression are most frequently based on achieving a cut-off score on clinical rating scales of depressive symptoms. Research in this area has sparsely included psychosocial function or health-related quality of life as a primary outcome measure in clinical trials. However, the need to fully understand the impact of depression and its treatments on functioning is great, given the existing evidence of the profound effect that depression has on function. Even mild depressive symptoms and subsyndromal depression result in functional impairment and reduced quality of life, and untreated residual depressive symptomatology can result in an increased likelihood for relapse of the fully symptomatic disorder (i.e. major depressive disorder). Therefore, clinicians and researchers alike need to broaden the focus of treatment to encompass not only the specific symptoms of depression, but the functional consequences as well. Many tools have been developed to assess function and quality of life, both globally as well as within specific domains. In addition, the effect of residual symptoms associated with functional impairment (i.e. insomnia, fatigue, pain [somatic] symptoms and cognition) in depression, even independently of depressive symptoms, warrants evaluation and monitoring. Recommendations for evaluating functional outcomes include: (i) adequately assessing functional impairment; (ii) identifying and/or developing treatment plans that will target symptoms associated with functional impairments; and (iii) monitoring functional impairments and associated symptoms throughout the course of treatment. The development of treatments that specifically target improvements in functional impairments is needed, and may require the use of novel treatment strategies.