Objective: After remission of an anxiety disorder, subjects often experience persistent functional impairments. We examined whether impairments in mental and physical functioning following remission are a continuation of premorbid lower functioning (trait effect), due to impairments that develop during the anxiety disorder and persist beyond recovery (scar effect), or both. Methods: Data were derived from the Netherlands Mental Health Survey and Incidence Study-2 (NEMESIS-2), a prospective psychiatric epidemiologic study among the general population with a 3-wave design (6-year follow-up, with the study starting in 2007 and ending in 2015). DSM-IV anxiety disorders were measured with the Composite International Diagnostic Interview. Functioning was assessed with the Medical Outcomes Study 36-Item Short Form Health Survey. We evaluated trait effects using between-subjects comparison and scar effects using within-subjects comparisons. Results: Compared to healthy controls, individuals with anxiety disorders had showed significant impairment in mental functioning (β = -11.6 [SE = 0.78]; P < .001) and physical functioning (β = -12.1 [SE = 1.14]; P < .001) prior to the onset of the anxiety disorder (n = 199), indicating a trait effect. In those who developed an anxiety disorder that remitted within the 6-year followup (n = 92), functioning after remission (at second follow-up) was similar to functioning before onset (at baseline), indicating that a scar effect was absent. A trend toward mental scarring was visible in the subgroup with recurrent anxiety disorders (P = .03). Conclusions: Persistent functional limitations following remission largely reflect a preexisting trait effect. Since lower levels of functioning are associated with relapse, investments in functional improvement seem worthwhile. Relapse prevention might help to prevent mental scarring.