The authors compared criterion-based diagnoses (DSM-III) with clinical diagnoses (DSM-II) for 102 psychiatric inpatients. The introduction of specified diagnostic criteria represented a refinement of existing diagnostic practices rather than a qualitatively different approach to diagnoses; however, in the schizophrenia and affective disorder categories, nonwhites and women were more often assigned to worse prognostic category by the DSM-II system than were white men with similar symptoms. The authors suggest that the introduction of DSM-III criteria may ensure more appropriate diagnosis and treatment for nonwhites and women.