Aims To validate the Spanish version of the University of California Performance Skills Assessment (UPSA) in patients with severe mental disorders. Methods Naturalistic, 6month follow-up, multicentre, validation study. 139 patients with schizophrenia, 57 bipolar patients and 31 controls were evaluated using the following scales: Spanish UPSA (Sp-UPSA), Clinical Global Impression, Severity (CGI-S), Global Assessment of Functioning (GAF), and Personal and Social Performance (PSP). Results Reliability: Internal consistency (Cronbach's alpha) was 0.81 in schizophrenia and 0.58 in bipolar patients. Test–retest was 0.74 and 0.65 (p <0.0001) respectively. Construct validity: Pearson correlation coefficients between Sp-UPSA and PSP total scores were 0.42 (p <0.0001) for schizophrenia and 0.44 (p =0.001) for bipolar patients. For Sp-UPSA and GAF scores correlation coefficients were 0.43 and 0.52 (p <0.0001) respectively. Discriminant validity: The Sp-UPSA discriminated between patients and controls. In schizophrenia patients it also discriminated among different levels of illness severity according to CGI-S scores. In control versus patients with schizophrenia contrasts, the area under the curve was 0.89 and a cut-off point of 85 provided a sensitivity of 82.7% and a specificity of 77.4%. In bipolar patients, the area under the curve was 0.85 and a cut-off point of 90 provided a sensitivity of 82.5% and a specificity of 64.5%. Conclusion The Spanish UPSA is a reliable and valid instrument for assessing functional capacity in severe mentally ill patients. It seems to be appropriate for use in clinical trials and in everyday clinical practice as a means of monitoring functional outcomes.