Neurotic and psychotic patients who had been temporarily retired from naval service were reevaluated periodically and rated on degrees of disability by physical evaluation boards. Personal history and symptom variables were correlated with changes in amount of psychiatric disability over a S-yr. period. Recovery or improvement was more rapid and complete in neurotics, but improvement was more predictable in psychotics. Significant correlates of improvement for neurotics were: age at time of hospitalization, pay grade (rank), inadequate social life, and medical treatment for other than psychiatric condition. Significant prognostic indicators for psychotics included: diagnostic subtype (paranoid), age at the time of hospitalization, racial group, ideas of reference, delusions, thought disturbance, and anxiety level.