Treatments for cognitive and functional impairments associated with severe mental illnesses are urgently needed. We tested a 12-week, manualized, Compensatory Cognitive Training (CCT) intervention targeting prospective memory, attention, learning/memory, and executive functioning in the context of supported employment for people with severe mental illnesses who were seeking work. 153 unemployed, work-seeking outpatients with schizophrenia/schizoaffective disorder (n=58), bipolar disorder (n=37), or major depression (n=58) were randomized to receive supported employment plus CCT or enhanced supported employment, a robust control group. Assessments of neuropsychological performance, functional capacity, psychiatric symptom severity, and self-reported functioning and quality of life were administered at baseline and multiple follow-up assessments over two years; work outcomes were collected for two years. Forty-seven percent of the participants obtained competitive work, but there were no differences in work attainment, weeks worked, or wages earned between the CCT and the enhanced supported employment group. ANCOVAs assessing immediate post-treatment effects demonstrated significant, medium to large, CCT-associated improvements on measures of working memory (p=0.038), depressive symptom severity (p=0.023), and quality of life (p=0.003). Longer-term results revealed no statistically significant CCT-associated improvements, but a trend (p=0.058) toward a small to medium CCT-associated improvement in learning. Diagnostic group (schizophrenia-spectrum vs. mood disorder) did not affect outcomes. We conclude that CCT has the potential to improve cognitive performance, psychiatric symptom severity, and quality of life in people with severe mental illnesses. Receiving CCT did not result in better work outcomes, suggesting that supported employment can result in competitive work regardless of cognitive status.