Psychosocial factors have been found to have a significant impact on functional activity, particularly among persons with chronic pain. While various systems have been developed to assess functional limitations through functional capacity evaluation (FCE), assessment of psychosocial factors that may impact function have been largely ignored. This paper examines the existing literature on psychosocial factors and FCE performance. Given that there are few studies that have directly addressed this issue, the paper also examines psychosocial factors that have been found to influence function in persons with pain. The results of the literature review indicate that few psychosocial factors have been found to be directly associated with FCE and functional measures, although many are related to various measures of disability. The strongest evidence that psychosocial factors are related to functional performance is based on the studies examining the association between functional activity and pain-related fear, self-efficacy, and illness behavior. Psychosocial factors have also been shown to influence measures of sincerity of effort often obtained during FCE. Proposals for modifying FCE assessment are given based on the available data, as well as suggestions for future research.