Life stress following trauma exposure is a consistent predictor of the development of posttraumatic stress disorder (PTSD). However, there is a dearth of research on the effect of life stress on PTSD treatment outcomes. The current study examined the effects of pretreatment levels of perceived life stress on treatment outcome in a sample of 200 individuals with PTSD who were randomized to receive either prolonged exposure (PE) therapy or sertraline as part of a clinical trial. Life stress over the year prior to treatment significantly interacted with treatment type to predict higher residual PTSD symptom severity, as assessed using the PTSD Symptom Scale-Interview, among participants who received sertraline but not those who received PE, β = .24, p = .017, ∆R2 = .03. These findings were similar for self-reported depression severity, β = .27, p = .008, ∆R2 = .04. Adherence to either PE homework or sertraline compliance did not mediate this association nor did life stress predict treatment retention for either treatment arm. Higher levels of perceived life stress may serve as a prescriptive predictor of PTSD treatment outcome, with PE remaining efficacious regardless of heightened pretreatment life stress. These findings encourage clinician confidence when providing PE to individuals with higher levels of life stress. Future researchers should examine the impact of PTSD treatment on perceived and objective measures of life stress to improve treatment for individuals who experience chronic stress.