In the present study, the effectiveness and utility of DSM-III axis III in terms of adequate identification of physical disorders in psychiatric outpatients is appraised empirically. To this effect, the presence of physical disorders in diagnostic statements recorded in clinical charts is compared in a large medical center for two psychiatric outpatient samples, one from the nonmultiaxial DSM-II era and one after the implementation of the multiaxial DSM-III. In the earlier sample, 11% of the patients were diagnosed as having physical disorders. In the DSM-III sample, 42% of the patients were so diagnosed. The latter figure is consistent with the 40% average prevalence of physical disorders reported in careful studies of the physical condition of ambulatory psychiatric patients. © 1995 by Williams & Wilkins.