<p>Unemployment and the risk of becoming unemployed is associated with limitations in participation, mental health problems, and in some injustice perceptions. In addition, unemployment-exposed people are at risk of embitterment in reaction to the unemployment situation. This can potentially lead to deteriorated health, further participation restrictions, and problems to re-enter the labor market. This study investigates the association of mental health problems and embitterment with work ability and capacity impairments. This cross-sectionally designed study includes 695 fully completed on-site surveys with people in front of a job center who are either unemployed or at risk of unemployment. Around 18% of participants reported severe embitterment levels. The amount of sick days and worse global and physical work ability was mostly associated with mental health problems. Low psychological work ability was associated with higher embitterment. Capacity impairments according to the Mini-ICF-APP-S were associated with mental health problems, and this association was further worsened by additional severe embitterment. In addition to mental health problems, embitterment is also important for understanding mental work ability problems. Embitterment may—in addition to general mental health problems—increase capacity limitations. It should therefore be recognized in the interaction with unemployment risk groups and in work reintegration processes.</p>