Since the start of Operation Iraqi Freedom and Operation Enduring Freedom, over 2 million U.S. military members were deployed to Iraq and Afghanistan. The estimated prevalence of posttraumatic stress disorder (PTSD) among soldiers and Marines returning from combat zones varies from 5%–20%; little is known about those individuals whose PTSD renders them unfit for duty. This report describes the rates and correlates of PTSD in soldiers and Marines evaluated for disability. Data for service members who underwent disability evaluation between fiscal years 2005–2010 were analyzed for trends in disability rates, ratings, retirement, and comorbid disability. PTSD rates varied by age, sex, race, rank, branch of service, and component. Most cases were deployed and were considered combat-related. Over the study period, the rate and severity of disability from PTSD increased substantially. Significant increases in disability from PTSD incidence, rating, and retirement were observed in both services. Other medical conditions, largely musculoskeletal and neurological, were present in the majority of cases indicating many cases also experienced disabling physical injuries. Further research is needed to target interventions accurately for redeploying service members to minimize comorbidity associated with disability from PTSD and facilitate continuation in military service or successful transition to civilian life.