Working alliance has been characterized as an important predictor of positive treatment outcomes. We examined whether illness insight, psychosocial functioning, social support and locus of control were associated with working alliance as perceived by both patient and clinician. We assessed 195 outpatients with psychotic or bipolar disorders. Our findings indicated that patients rated the alliance more positively when they experienced a greater need for treatment, fewer behavioral and social problems, and more psychiatric symptoms. Clinicians rated the alliance more positively in patients who reported fewer social problems and better illness insight. Patients' demographic characteristics, including being female and married, were also positively related to the clinician-rated alliance. Our results suggest that patients and clinicians have divergent perceptions of the alliance. Clinicians may need help developing awareness of the goals and tasks of patients with certain characteristics, i.e., singles, men, those with poor illness insight and those who report poor social functioning.