This study examines the relationship between diagnosis and life functioning using the Addiction Severity Index (ASI) with 467 hospitalized individuals with mental illness and substance abuse problems. Persons diagnosed with schizophrenia were the best functioning group across most of the ASI domains except employment and psychiatric functioning. More robust relationships were found between problem history (i.e., prior symptomatology or treatment) and current functioning. Respondents with histories of drug treatment, prior experience of anxiety and depression, self-injurious behavior, or violence control problems experienced more severe medical, drug, alcohol, psychiatric, legal, and family/social problems at the time of hospitalization. Violence control problems were related to drug use and criminal involvement, whereas self-injurious behavior was more often related to alcohol use and psychiatric distress. These findings suggest that problem history may be a stronger predictor of treatment need at the time of hospital entry than are more commonly used indexes, such as diagnosis.