Functional capacity evaluation (FCE) is commonly used in work rehabilitation to assess the capacity of the injured worker for return to work. Occupational therapists are major providers of FCE, especially in Australia. Despite a history of involvement in the functional assessment of clients for work, occupational therapy has few theoretical models for work assessment in general, and for FCE in particular. This may account for some of the confusion that exists about the conceptual basis of FCE in occupational therapy practice. This paper presents a framework for FCE that parallels occupational therapy's occupational performance model and the World Health Organisation's International Classification of Functioning, Disability and Health. The framework is used to clarify some of the confusions that exist in FCE research and practice, particularly the issue of measuring a client's function versus impairment. A redefinition of FCE for occupational therapy practice in the work assessment continuum is presented that supports occupational therapy practice and research in the area.