This paper describes a new conceptual framework for functional assessment, the Activity Space Model (ASM). According to this model, functional impairments may lead to restrictions in an individual's activity space, a multidimensional space that represents human potential for activity. For each elementary ability, restrictions in the corresponding dimension of the activity space can be evaluated by deriving a difficulty curve that depicts the relationship between the level of performance and the psychophysical cost of activity. The effect of disease on daily functioning is explained in terms of a tradeoff between the psychophysical cost and the value of each act of behavior to the disabled individual. These two constructs are measured on the same scale and expressed in units of difficulty. The location of each task within the activity space in relation to the difficulty curve determines whether it will be performed or avoided at a given point in time. The ASM has both theoretical and practical implications. It offers a new, integrated perspective on disability and suggests new strategies for developing and evaluating functional assessment measures.