This article reviews the professional literature on the topic of evaluating the competence of trainees in professional psychology training programs including program policies, procedures, and actual practice for identifying, remediating, and, in extreme cases, dismissing trainees who are judged unable to provide competent, professional care. This review covers the literature on the following major issues related to trainee performance: (a) problems with definitions of impairment, (b) established professional standards for supervision and evaluation of trainees based on accreditation guidelines and ethical standards, (c) methodological critiques of empirical studies on trainee impairment, (d) issues related to evaluation and identification of trainees who are making inadequate progress toward professional competence, (e) issues related to remediation, (f) dismissal and due process, and (g) relevant legal cases and considerations. The review of these topics provides the platform for an extensive list of recommendations directed toward faculty and supervisors responsible for professional psychology training programs and internships.