The Competence Assessment Tool for Psychiatric Advance Directives (CAT-PAD), a new instrument designed to assess competence to complete a psychiatric advance directive (PAD), is described. Initial psychometric properties and data regarding participant performance on the instrument are detailed. Study participants were 80 outpatients with at least two psychiatric crises in the previous 2 years. The CAT-PAD has three scales that assess decisional capacities regarding the nature and value of PADs and a specific treatment choice: Understanding, Appreciation, and Reasoning. Construct and discriminant validity were evaluated using the AD-Maker competence questions, symptom and functioning scales, and clinical and demographic characteristics. Reliability was strong for the Understanding and Reasoning scales and total score, and adequate for the Appreciation scale. Construct validity was demonstrated in relation to the AD-Maker competence questions and scales assessing psychotic symptoms. The CAT-PAD was generally unbiased with respect to gender, ethnicity, and age. Controlling for psychotic symptoms, diagnosis was not significantly related to CAT-PAD scores. Most participants performed well on the CAT-PAD. Using rigid cutoffs for the CAT-PAD is not advised due to lack of consensus on the degree of capacities required for completing a PAD, and differences in situational demands. Routine screening using the CAT-PAD is also not recommended, but rather assessment is suggested when a priori doubts exist about a person's decisional capacity. Such use of the CAT-PAD may allow clinicians to better trust the content of PADs, which may, in turn, increase the likelihood PADs will be honored.