In rehabilitation, assessment of outcomes requires refinement of existing measurement and analysis tools. A suitable taxonomy of outcomes, risk factors, and treatment modalities must be developed to reflect the field's complexity and the multiplicity of care providers. The goal of outcomes studies is to distinguish the effects of treatment from improvement resulting from the natural course of illness. Outcomes researchers must adjust for casemix and be alert to possible selection effects. A common set of outcome measures is needed to measure disability. Those currently in use reflect both nursing home and rehabilitation care. They rely on provider information and measure patients' performance, but they do not record patients' perceptions of important components of outcomes. Current techniques for describing treatment are inadequate. Outcomes assessment must include adjustment for prognostic factors and must be measured against baseline information at the onset of treatment. Although patients' perception of care is recognized as important to outcomes assessment, patients should also play a central role in decision-making about care and in weighting the importance of the various outcomes. In an era of managed care, the major challenge for rehabilitation care is to demonstrate its cost-effectiveness. Clear and precise analysis of the salient issues and a dynamic model of outcomes measurement will facilitate this goal and will permit incorporation of new learning in this field.