In this paper we describe the use of systematic retrospective and prospective life chart methodology and document the substantial morbidity experienced even in closely monitored and aggressively treated bipolar patients rated on a daily basis for 1 year. 35 BP I (n = 26) and BP II (n = 9) patients were recruited for an ongoing treatment study comparing the prophylactic effects of lithium or carbamazepine for 1 year with a crossover to the other drug in the second year, and a third year on the combination of the two. Adjuncts such as antidepressants and neuroleptics were allowed in each phase when clinically required. The results of the combined cohort for the first year are presented in this manuscript. All patients also had a retrospective life chart completed to map affective episodes based on the degree of functional incapacity (mild, moderate, severe). For prospective ratings patients were usually interviewed biweekly (but at a minimum of every 4 weeks), and daily ratings integrating degree of functional incapacity and self-rated mood based on the Life Chart Method and Manual (the NIMH-LCM) were obtained. In the first year of treatment 12 patients (34.3%) had to have their treatment phase (lithium or carbamazepine) discontinued far the fallowing reasons: jive were hospitalized, five had severe dysfunction without hospitalization, and two had treatment-limiting side effects. Adjunctive treatment was required by 71.4%. The mean number of days ill for each level of severity for all the patients was as follows (in days): 66.1, mild depression; 31.1, moderate depression; 2.8, severe depression; and 28.7, mild mania; 5.4, moderate mania; 0.9, severe mania; or a mean of 40.2 d/year with moderate to severe illness-related dysfunction. The duration of illness prior to study entry correlated with time depressed in the prospective year. These findings suggest that closely-monitored bipolar patients followed with prospective daily ratings during treatment with a primary mood stabilizer (carbamazepine or lithium) experience a substantial degree of morbidity and the need far adjunctive antidepressants and neuroleptics. There was notable continuity between course of illness life charted in the retrospective year and that observed prospectively. Depression 2:95–104 (1994). ©1994 Wiley-Liss, Inc.