Abstract Objective: This study incorporated level of functional impairment ratings at program admission into rehabilitation outcome (return to work/school) at the time of program discharge. Hypotheses: (1) Patients and families with better working alliance ratings will show better adjusted outcome; (2) patients seeking compensation will have poorer outcome than those not seeking compensation or receiving benefits; (3) speed of information processing and memory will relate to the level of adjusted outcome. Design: Consecutive neurorehabilitation admissions from March 1992 to May 1996. Setting: Outpatient milieu-based interdisciplinary day treatment program. Subjects: Sixty-four patients with heterogeneous brain injury etiologies. Main Outcome Measures: Adjusted outcome, defined as level of discharge productivity adjusted by staff ratings of functional severity of impairment at program admission; work readiness and work eagerness, based on average staff ratings. Results: At discharge, 89.5% of patients showed fair or good adjusted outcome; 62% were gainfully employed/full-time students; 15.6% resumed preinjury status. Better working alliance predicted better adjusted outcome. Patients seeking compensation showed significantly lower work eagerness ratings. Poorer outcome was associated with better neuropsychological status. Conclusions: Efficacy of neurorehabilitation was demonstrated for patients with better working alliance who were not seeking compensation. Adjusted outcome demonstrated greater sensitivity and utility by incorporating the variable of functional severity of impairment at program admission. Inclusion of “process” variables addressing working alliance, motivation, and capacity to work provide important contributions to understanding rehabilitation outcome.