ObjectiveWe explored whether patients with varied levels of baseline deficits in compensatory skills and self‐understanding had different outcomes across cognitive and dynamic therapies.MethodThe assessment battery was administered at intake and termination (N = 97; 66% female, 81% Caucasian). We conducted regression analyses predicting symptom change from baseline levels of self‐understanding and compensatory skills. We also evaluated the interaction between baseline skill levels and treatment condition in the prediction of psychotherapy outcome.ResultsThere was a significant interaction between treatment group and baseline compensatory skills in the prediction of Hamilton Depression Rating Scale (HAMD) symptom change, F(1,76) = 4.59, p = .035. Baseline deficits in compensatory skills were significantly related to symptom change for patients who received cognitive treatment, ηρ = .40, p = .037, while baseline levels of self‐understanding were not significantly predictive of treatment outcome in either condition. Baseline skill variables did not predict symptom change as measured by the HAMA.ConclusionsThe findings support a capitalization model of cognitive therapy, whereby patients with relative strengths in compensatory skills at baseline have better treatment outcomes.