Bipolar disorder represents a chronic and recurrent illness which can lead to severe disruptions in familial, social and occupational functioning. Modern studies, both short and long-term, have showed that many patients with bipolar disorder are affected by significant functional impairment even during periods of remission. However, the bases for such limited functional recovery are not entirely clear; it has been reported as associated with different factors. For instance, some variables such as male sex, older age at onset, unmarried, low socio-economic level, lack of social supports, number of previous episodes, number of previous hospitalizations, longer duration of the illness, mixed episodes, psychosis and substance use disorder have been identified as predictors of functional impairment in bipolar patients. Subsyndromal depressive symptoms in bipolar disorder have been also related to functional role impairment in multiple domains such as work/school performances, domestic activities, and relationships with family/friends. Furthermore, neuropsychological deficits have been related to poor psychosocial functioning. Cognitive deficits, especially verbal memory and sustained attention, have also been associated with poor psychosocial and occupational functioning. Deficits in memory, attention and planning may lead to impairment in social, interpersonal and occupational functioning and these deficits make it difficult to undertake occupational tasks or engage in interpersonal relationships without difficulties. In summary, clinical characteristics and cognitive factors may contribute to poor psychosocial functioning in bipolar disorder. Psychosocial interventions such as psychoeducation and cognitive rehabilitation in combination with pharmacotherapy should be implemented with the aim of improving the psychosocial outcome.