Purpose: To validate the ICECAP-O capability measure in psycho-geriatric elderly in nursing homes, we compared the capability scores of restrained and unrestrained clients. Both nursing staff and family were used as proxies for assessing clients' capabilities. Method: For 122 psycho-geriatric elderly, a total of 96 nursing professionals and 68 family members completed a proxy questionnaire. We investigated the convergent and discriminant validity of the ICECAP-O and measures of care dependency, health-related quality of life, and overall quality of life. We also directly compared ICECAP-O scores of the 56 clients for whom both nursing staff and family members had completed the questionnaire. Results: Convergent validity between ICECAP-O and care dependency, health-related, and overall quality of life measures could be established, as well as discriminant validity for the restrained and unrestrained groups. Nursing and family proxy ICECAP-O tariffs were not significantly correlated. Discussion ICECAP-O measures a more general concept than health-related quality of life and can differentiate between restrained and non-restrained psycho-geriatric clients. Since nurses seem to be able to assess the current quality of life of clients using the ICECAP-O more precisely than the family proxies, for now the use of nursing proxies is recommended in a nursing home setting.