Background Psychosocial impairment represents an important treatment target in major depressive disorder (MDD). The majority of patients with MDD do not regain premorbid levels of psychosocial functioning despite the resolution of core depressive symptoms. This study aimed to investigate the respective effects of cognitive function and depression severity on impaired psychosocial function in MDD. Methods Adults aged 18–65 with moderate-to-severe MDD (n = 100) and age-, sex-, and education-matched healthy controls participated in a cross-sectional study validating the THINC-integrated tool (THINC-it), a cognitive screening tool comprised of objective and subjective measures of cognitive function. Depression severity was assessed using the Montgomery-Åsberg Depression Rating Scale and psychosocial function was assessed using the Sheehan Disability Scale (SDS). Results Subjects with MDD reported greater impairment in psychosocial function than healthy controls, with significant differences in SDS total and domain scores (ps <.01) after controlling for age, sex, and education. Generalized linear models indicated that subjective cognitive function was most strongly associated with SDS total score (RR =.14, p =.01) and SDS domains of work/school (RR =.15, p =.03), family and home responsibilities (RR =.15, p =.02), and economic days lost (RR =.18, p =.03). Depression severity was most strongly associated with SDS social life (RR =.08, p <.01) and economic days underproductive (RR =.07, p <.01). Objective cognitive function was not significantly associated with any SDS outcomes. Limitations The cross-sectional, observational study design limits temporal inferences. The self-report nature of measures included may have influenced associations observed. Potential medication effects are not noted. Conclusions Cognitive deficits, as measured by the THINC-it, are associated with significant psychosocial impairment in MDD. These results provide empirical support for the assessment of both subjective and objective measures of cognition, as they are not associated with each other and have differential effects on functional trajectory.