OBJECTIVE: Posttraumatic stress disorder (PTSD) has significant negative effects on occupational, interpersonal, and social functioning. Supported employment is highly effective in helping people with a diagnosis of PTSD obtain and maintain competitive employment. However, less is known about the impact of supported employment on functioning in work or school, social, and interpersonal areas as specifically related to the symptoms of PTSD. METHOD: The Veterans Individual Placement and Support Toward Advancing Recovery study was a prospective, multisite, randomized, controlled trial that compared Individual Placement and Support (IPS) supported employment with a stepwise vocational rehabilitation involving transitional work (TW) assignments with unemployed veterans with PTSD diagnoses (n = 541) at 12 Veterans Administration (VA) medical centers. This analysis focuses on the PTSD-related functional outcomes over the 18-month follow-up period. RESULTS: Compared with those randomized to TW, the PTSD Related Functioning Inventory (PRFI) total score significantly improved for participants randomized to IPS (LSMeans difference = -3.92, 95% CI [-7.49, -.36]; p = .03) over 18 months. When the Work/School subscale of the PRFI was removed from the analysis, the IPS group continued to show significant improvements compared with the TW group on the PRFI relationship and lifestyle domains (LSMeans difference = -2.37, 95% CI [-4.74, .00]; p = .05), suggesting a positive impact of IPS beyond work/school functioning. CONCLUSION: Compared with the usual-care VA vocational services for veterans with PTSD, IPS supported employment is associated with greater improvement in overall PTSD-related functioning, including occupational, interpersonal, and lifestyle domains. In addition to superior employment outcomes, IPS has a positive impact on occupational-psychosocial functioning outcomes. (PsycINFO Database Record (c) 2019 APA, all rights reserved).