DSM-III is a major document in the history of psychiatry. The DSM-III system is here seen as an instrument that promotes the scientific development of psychiatry and the clarity of communication among psychiatrists. However a major theme of this review is that reliability does not ensure validity. While making this point it is recognized that the major defects in the DSM-III system result from scientific inadequacies inherent in present day psychiatry. This review also may be taken as an amplification of the statement in DSM-III-R that it is not a textbook. In particular the data required to arrive at diagnoses in the DSM-III system do not provide sufficient information to arrive at a comprehensive biopsychosocial case formulation, a shortcoming that has relevance for teaching and clinical practice.