Item response theory (IRT) and related latent variable models represent modern psychometric theory, the successor to classical test theory in psychological assessment. While IRT has become prevalent in the assessment of ability and achievement, it has not been widely embraced by clinical psychologists. This appears due, in part, to psychometrists' use of unidimensional models despite evidence that psychiatric disorders are inherently multidimensional. The construct validity of unidimensional and multidimensional latent variable models was compared to evaluate the utility of modern psychometric theory in clinical assessment. Archival data consisting of 688 outpatients' presenting concerns, psychiatric diagnoses, and item level responses to the Brief Symptom Inventory (BSI) were extracted from files at a university mental health clinic. Confirmatory factor analyses revealed that models with oblique factors and/or item cross-loadings better represented the internal structure of the BSI in comparison to a strictly unidimensional model. The models were generally equivalent in their ability to account for variance in criterion-related validity variables; however, bifactor models demonstrated superior validity in differentiating between mood and anxiety disorder diagnoses. Multidimensional IRT analyses showed that the orthogonal bifactor model partitioned distinct, clinically relevant sources of item variance. Similar results were also achieved through multivariate prediction with an oblique simple structure model. Receiver operating characteristic curves confirmed improved sensitivity and specificity through multidimensional models of psychopathology. Clinical researchers are encouraged to consider these and other comprehensive models of psychological distress.