Policy and clinical management decisions depend on data on the health and cost impacts of psychiatric treatments under usual care, i.e., effectiveness. Clinical trials, however, provide information on treatment efficacy under best-practice conditions. An understanding of the design, analysis, and conventions of both efficacy and effectiveness studies can lead to research that better informs clinical and societal questions. This paper contrasts the strengths and limitations of clinical trials and effectiveness studies for addressing policy and clinical decisions. These research approaches are assessed in terms of outcomes, treatments, service delivery context, implementation conventions, and validity. Clinical trials and effectiveness research share problems of internal and external validity despite more attention to internal validity in clinical trials (e.g., randomization, blinding, standardized protocols) and to external validity in effectiveness studies (e.g., community-based treatments, representative samples). To develop research at the interface of clinical trials and effectiveness studies, research goals must be redefined, and methods, such as cost-utility and econometric analyses, must be shared and developed. Development of hybrid designs that combine features of efficacy and effectiveness research will require separation of conventions such as frequency of follow-up, intensity of measurement, and sample size from the central scientific issues of aims and validity.