IntroductionThe presence of pain‐associated psychological distress (PAPD) in musculoskeletal disorders, including negative mood, fear‐avoidance, and lack of positive affect/coping, is associated with prolonged disability. The importance of considering psychological influence on pain is well known, but practical ways of addressing it are not as straightforward. Identifying relationships between PAPD and pain intensity, patient expectations, and physical function may guide the development of future studies that assess causality and inform clinical practice.ObjectiveTo assess the relationship between PAPD measured by the Optimal Screening for Prediction of Referral and Outcome—Yellow Flag tool, and baseline pain intensity, expectations of treatment effectiveness, and self‐reported physical function at discharge.DesignRetrospective cohort study.SettingHospital‐based outpatient physical therapy.ParticipantsPatients 18 to 90 years old with spinal pain or lower extremity osteoarthritis.Main Outcome MeasuresPain intensity and patient expectations of treatment effectiveness at intake, and self‐reported physical function at discharge.ResultsA total of 534 patients, 56.2% female, median (interquartile range [IQR]) age 61 (21) years with an episode of care between November 2019 and January 2021 were included. A multiple linear regression showed a significant association between PAPD and pain intensity with 6.4% (p < .001) of the variance explained. PAPD explained 3.3% (p < .001) of the variance in patient expectations. One additional yellow flag present resulted in a 0.17‐point increase in pain intensity and 1.3% decrease in patient expectations. PAPD was also associated with physical function with 3.2% (p < .001) of the variance explained. PAPD explained 9.1% (p < .001) of the variance in physical function at discharge in the low back pain cohort only when assessed independently by body region.ConclusionThese findings support the theory that the pain experience is complex and multiple factors should be considered when evaluating a patient with musculoskeletal pain. Clinicians who have identified PAPD may consider these relationships when planning or modifying interventions and pursuing multidisciplinary collaboration.