For rehabilitation and disability research, participation and environment are 2 crucial constructs that have been placed center stage by the International Classification of Functioning, Disability and Health (ICF). However, neither construct is adequately conceptualized by the ICF, and both are difficult to measure. This article addresses conceptual and methodologic issues related to these ICF constructs, and recommends an improved distinction between activities and participation, as well as elaboration of environment. A division of the combined ICF categories for activity and participation into 2 separate taxonomies is proposed to guide future research. The issue of measuring participation from objective and subjective perspectives is examined, and maintaining these distinct conceptual domains in the measurement of participation is recommended. The methodological issues contributing to the difficulty of measuring participation are discussed, including potential dimensionality, alternative metrics, and the appropriateness of various measurement models. For environment, the need for theory to focus research on those aspects of the environment that interact with individuals' impairments and functional limitations in affecting activities and participation is discussed, along with potential measurement models for those aspects. The limitations resulting from reliance on research participants as reporters on their own environment are set forth. Addressing these conceptual and methodological issues is required before the measurement of participation and environmental factors can advance and these important constructs can be used more effectively in rehabilitation and disability observational research and trials.