HIV-1 infection can be associated with neuropsychological (NP) deficits ranging from subtle to severe. The purpose of this study was to evaluate the functional, or "real-world" impact of HIV-associated NP impairment in a group of 267 HIV-infected participants. All participants received comprehensive NP, neuromedical, and standardized functional evaluations that included laboratory measures of shopping, cooking, financial management, medication management and vocational abilities. Compared to NP-normal participants, those with NP impairment performed significantly worse on all laboratory measures of everyday functioning. Multivariate analyses revealed that the NP ability domains of Abstraction0Executive Function, Learning, Attention0Working Memory and Verbal abilities most strongly and consistently predicted failures on the functional battery. Both NP impairment and impairment on the functional battery were significantly associated with subjective experiences of cognitive difficulties, as well as unemployment and increased dependence in activities of daily living; multivariate prediction models that also considered depressed mood and biological measures of disease progression revealed that impairment on the functional battery and depression were the only unique predictors of all three indicators of "real-world" functioning. The current results add to growing evidence concerning the clinical significance of HIV-associated NP impairment. Objective, laboratory based functional measures, such as those used here, may compliment NP testing in future studies directed at understanding the impact on life quality of central nervous system disorders and their treatments. Finally, there is a need for additional research investigating the apparently independent effect of depression on level of everyday functioning in HIV infected persons. (JINS, 2004, 10, 317-331.)