Background: Most studies on the factors involved in the functional outcome of patients with bipolar disorder have identified subsyndromal depressive symptoms and cognitive impairment as key players. However, most studies are cross-sectional and very few have analyzed the interaction between cognition and subclinical depression. The present study aimed to identify the role of cognition, and particularly verbal memory, and subthreshold depressive symptoms in the functional outcome of patients with bipolar I and II disorder at one year follow-up. Method: A confirmatory analysis was performed using the path analysis. A total of 111 euthymic patients were included to test the role of verbal memory as a mediator in the relationship of subthreshold depressive symptoms and functional outcome at one year follow-up. Measures of verbal memory, subthreshold depressive symptoms and functioning (at baseline, at 6 months and at one year follow-up) were gathered through the use of a neuropsychological assessment and validated clinical scales. Results: The hypothesized mediation model displayed a good fit to data (Chi=0.393, df=2, p=0.625; RMSEA < 0.001 with CI: 0.001-0.125 and CFI=1.00). Functional outcome at one year follow-up was predicted by the functional outcome at baseline, which in turn, was related to subthreshold depressive symptoms at baseline and to the verbal composite memory scores as a mediator variable. Conclusion: The results of this study prospectively confirm previous findings on the disabling role of subthreshold depressive symptoms and verbal memory impairment on psychosocial functioning. However, these results come from a sample with moderate to severe functional impairment; hence, as a limitation, this may hinder the generalization of these results.