This article discusses the current controversy surrounding the diagnostic utility of the Dexamethasone Suppression Test, addresses the questions raised by the recent editorial by Ross in this journal, discusses the general principles behind the development of tests, and estimates their diagnostic utility. This discussion aims to clarify some aspects of the controversy. It presents an operational analysis of the Dexamethasone Suppression Test as utilized at a state hospital. This operational analysis shows that the test may be useful in distinguishing schizophrenia from psychotic depression, and mania from schizophrenia. Furthermore, it shows that the test is not useful as a screening test. These results are compared with those obtained by other investigators. The authors further show how test results can be used rationally by clinicians by so-called threshold analysis. Clinical data from a state hospital are used to illustrate this.