Objective The objective of the study was to compare the predictive utility of three commonly used functioning measures for people with serious mental illness in the prediction of independent living status. Methods We conducted a secondary data analysis from the Helping Older People Experience Success study with adults aged 50 years and older with a diagnosis of bipolar disorder, schizoaffective disorder, schizophrenia, or major depressive disorder (N = 183). Results Total scores for the Independent Living Skills Survey, Multnomah Community Ability Scale, and UCSD Performance‐Based Skills Assessment were modestly inter‐correlated. For the overall sample, greater independent living status at baseline and 1‐year follow‐up was predicted by higher baseline functioning scores on both the self‐reported Independent Living Skills Survey and the UCSD Performance‐Based Skills Assessment. However, by diagnostic subgroup, independent living status at 1‐year follow‐up was only predicted by the Independent Living Skills Survey for affective disorders and by the UCSD Performance‐Based Skills Assessment for schizophrenia‐spectrum disorders. For the total sample, the Independent Living Skills Survey was associated with self‐efficacy and employment status. Neither the Independent Living Skills Survey nor UCSD Performance‐Based Skills Assessment was associated with medical or psychiatric hospitalizations or with subjective physical or mental health status. Conclusions These commonly used functioning measures for people with serious mental illness examine different aspects of functioning. The choice of functional measurement should be based on the population under study and intervention goals. Copyright © 2017 John Wiley & Sons, Ltd.