Rationale. Integrated trauma-focused treatments produce superior PTSD and substance use outcomes than comparison conditions for co-occurring posttraumatic stress disorder and alcohol use disorder (PTSD/AUD), but little is known about psychosocial functioning outcomes or mediators of change in PTSD/AUD treatment. This three-paper dissertation aimed to 1) examine baseline associations between posttraumatic-cognitions (PT-cognitions; I am incompetent/the world is dangerous) and functioning; 2) compare psychosocial functioning outcomes, and 3) examine PT-cognitions as a mediator of symptom, functioning, and suicidal ideation (SI) change in a randomized controlled trial (RCT) comparing integrated-prolonged exposure (I-PE; trauma-focused) and integrated-coping skills (I-CS) treatments for PTSD/AUD. Methods. Participants were Veterans with PTSD/AUD from an RCT comparing I-PE and I-CS. Study 1 used baseline data (n=145); studies 2-3 used an intent-to-treat sample (n=119) with assessments at pre, posttreatment, 3-month, 6-month timepoints. Results. Study 1 (Lyons et al., 2019) used multiple regression to examine associations between baseline PT-cognitions and psychosocial functioning. PT-cognitions were significantly associated with functioning when controlling for PTSD/AUD severity (b=-0.42,p<.001,sr2=0.11). Study 2 (Lyons et al., 2021) used multilevel models to examine if psychosocial functioning improved more in I-PE than I-CS. Psychosocial functioning improved to a significant degree during treatment (b=9.55, 95%CI:6.66;12.45), with no significant treatment differences (b=1.65,95%CI:-4.11;7.45). Functioning change did not reach reliable change (RCI=9.70)–improvements may not be noticeable in daily living. Study 3 (Lyons et al., in preparation) used structural equation models to test if improvements in PT-cognitions during treatment led to concurrent improvements in psychosocial functioning, PTSD severity, heavy drinking, and SI. Reductions of PT-cognitions during treatment were associated with concurrent improvements in PTSD (b=9.096,p<0.001) and functioning (b=-7.915,p<0.001). No significant between treatment PT-cognition effects emerged. Concurrent change between PT-cognitions and SI were not significantly associated, whereas change between PT-cognitions and heavy drinking were differentially related. Conclusions. Findings highlight the need to examine additional ways of targeting functioning in PTSD/AUD, given lack of reliable change. Moreover, these studies show that PT-cognitions play an important role in symptom and functioning improvement across cognitive behavioral treatments for PTSD/AUD. However, no significant treatment differences in PT-cognition change suggest that additional mediators should be examined to better understand how I-PE produces superior PTSD outcomes.