Chronic pain and disability are closely related. Evidence supporting the role of the central nervous system (cortical and limbic system), as opposed to peripheral, nociceptive processes, in the development and maintenance of chronic pain is reviewed. This includes the phenomenon of central sensitization, relevant limbic-cortical processes, and psychiatric diagnoses often co-morbid with chronic pain. Psychological and socioeconomic 'red flags' for a poor return to work prognosis are delineated. The critical importance of cognitive beliefs and, therefore, physician statements to patients concerning their medical condition, resulting restrictions, and limitations is emphasized. The relationship between motivation, performance, and patients' beliefs about what they can do (self-efficacy) and what will happen when they return to work is discussed. The need for a comprehensive interdisciplinary approach oriented towards functional restoration to enable patients with chronic pain to reach maximum medical improvement (MMI) is reviewed. It is argued that psychiatry, with a bio-psychosocial perspective is uniquely qualified to evaluate and treat chronic pain.