A 3-phase model of psychotherapy outcome is proposed that entails progressive improvement of subjectively experienced well-being, reduction in symptomatology, and enhancement of life functioning. The model also predicts that movement into a later phase of treatment depends on whether progress has been made in an earlier phase. Thus, clinical improvement in subjective well-being potentiates symptomatic improvement, and clinical reduction in symptomatic distress potentiates life-functioning improvement. A large sample of psychotherapy patients provided self-reports of subjective well-being, symptomatic distress, and life functioning before beginning individual psychotherapy and after Sessions 2, 4, and 17 when possible. Changes in well-being, symptomatic distress, and life functioning means over this period were consistent with the 3-phase model. Measures of patient status on these 3 variables were converted into dichotomous improvement-nonimprovement scores between intake and each of Sessions 2, 4, and 17. An analysis of 2 x 2 cross-classification tables generated from these dichotomous measures suggested that improvement in well-being precedes and is a probabilistically necessary condition for reduction in symptomatic distress and that symptomatic improvement precedes and is a probabilistically necessary condition for improvement in life functioning.