Physicians, employers, insurers, and benefits adjudicators often rely upon functional capacity evaluations (FCEs) to determine musculoskeletal capacity to perform physical work, often with legal or occupational consequences. Despite their widespread application for several decades, a number of scientific, legal, and practical concerns persist. FCEs are based upon a theoretical model of comparing job demands to worker capabilities. Validity of FCE results is optimal with accurate job simulation and detailed, intensive assessments of specific work activities. When test criteria are unrelated to job performance, or subjective evaluation criteria are employed, the validity of results is questionable. Reliability within a subject over time may be adequate to support the use of serial FCE data collection to measure progress in worker rehabilitation. Evaluation of sincerity of effort, ability to perform complex or variable jobs, and prediction of injury based upon FCE data is problematic. More research, especially studies linking FCE results to occupational outcomes, is needed to better define the appropriate role for these evaluations in clinical and administrative settings.