Considerable controversy exists with regard to the interpretation and definition of the stressor "A1" criterion for Post Traumatic Stress Disorder (PTSD). At present, classifying an event as either traumatic (satisfying DSM-IV Criterion-A1 for PTSD), or non-traumatic (life event) is determined by the rater's subjective interpretation of the diagnostic criteria. This has implications in research and clinical practice. Utilizing a sample of 860 Australian adults, this study is the first to provide a detailed examination of the impact of event categorization on the prevalence of trauma and PTSD. Overall, events classified as non-traumatic were associated with higher rates of PTSD. Unanimous agreement between raters occurred for 683 (79.4%) events. As predicted, the categorization method employed (single rater, multiple rater-majority, multiple rater-unanimous) substantially altered the prevalence of Criterion-A1 events and PTSD, raising doubts about the functionality of PTSD diagnostic criteria. Factors impacting on the categorization process and suggestions for minimizing discrepancies in future research are discussed.