The authors describe the use of diagnostic supervision to identify common errors made by trainees in the application of DSM-III to multiaxial evaluations in an outpatient clinic. Errors on all five axes were due primarily to misapplications of diagnostic criteria and conventions. Errors on axes I, IV, and V were most frequent. Axis I errors were commonly due to confusion about the relationship of dysthymic disorder to major depression, neglect of substance use disorder diagnoses, and misuse of the adjustment disorder and V-code categories. On axis IV, the severity of psychosocial stressors was frequently overrated, based on several misconceptions. Axis V ratings were often erroneously overestimated because they were individualized rather than made on a uniform scale. No differences were found in the error rates of psychiatric residents compared with psychology interns except on axis I, where interns made more errors. The authors discuss the implications of these errors for training residents and psychology interns in the use of DSM-III.