Trauma related guilt, a distressing emotion associated with negative cognitions regarding one's actions or inaction during a traumatic event, is common among individuals with posttraumatic stress disorder (PTSD). We hypothesized that trauma related guilt cognitions would partially explain the relationship between PTSD symptom severity and functioning. The sample consisted of 254 combat veterans or active duty military personnel who served in Operation Enduring Freedom, Operation Iraqi Freedom or Operation New Dawn (OEF/OIF/OND) who consented to participate in a larger PTSD treatment study. Results revealed a significant relationship between PTSD severity and guilt cognitions (standardized β = 0.40), as well as PTSD and overall functioning (β = 0.49). Guilt cognitions (β′s = 0.13 to 0.32) were significantly associated with nearly all domains of functioning, including overall functioning (β = 0.27), and partially explained the relationship between PTSD and functioning. This study lends support to the addition of guilt as a symptom of PTSD in the DSM-5 as it contributes significantly to functional impairment even when accounting for other symptoms of PTSD, although co-occurring mental health problems may also contribute to functional impairments associated with PTSD. Future studies are needed to investigate whether reductions in traumatic guilt are related to improved functional outcomes in PTSD treatments.