Bipolar affective disorder (BD) is a chronic mental disorder associated with increased disability. Individuals with BD experience significant cognitive and social disturbances starting with the first affective episode. They have noticeable functional impairments and poorer quality of life even in euthymia when symptoms are expected to subside. Certain sociodemographic and clinical factors are associated with disability in BD. Among these, residual affective symptoms, delay in treatment, treatment adherence, and comorbidities may be modifiable factors to reduce disability. There are a wide variety of assessment tools for disability, which leads to heterogeneity in current results. Although the Global Assessment of Functioning and the Functioning Assessment Short Test are the most used scales in BD research, two questionnaires have been specifically developed to assess functional impairment in patients with BD: the Bipolar Disorder Functioning Questionnaire and the Bipolar Functional Status Questionnaire. The World Health Organization Disability Assessment Schedule (WHODAS 2.0) has several advantages, as it is specifically designed for disability, has good psychometric properties, and has high cross-cultural comparability. Management and treatment of disability in BD require multifaceted approaches. Management of disability begins with achieving a stable clinical remission period (euthymia) and includes treating subthreshold symptoms, promoting functional recovery, preventing relapse, planning cognitive enhancement interventions, and treating comorbidities. Treatment options for disability are scarce; however, adjunctive psychosocial interventions alongside medications have shown promising results in restoring functioning and cognitive abilities. To successfully reduce disability in BD, a personalized care plan may be useful by enabling a multifactorial approach for the long-term follow-up of patients with BD.