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OBJECTIVE--To study the differences and the relation between what a doctor actually does in daily practice (performance) and what he or she is capable of doing (competence) by using national standards for general practice. DESIGN--General practitioners were consulted by four standardised (simulated) patients portraying four different cases during normal surgery hours. Later the doctors participated in a controlled practice test, for which they were asked to perform to the best of their ability. In the test they saw exactly the same standardised cases but in different patients. The patients reported on the consultations. SETTING--Province of Limburg, the Netherlands. SUBJECTS--442 general practitioners invited by a letter. 137 (31%) agreed to participate, of whom 36 were selected and visited. MAIN OUTCOME MEASURES--Number of actions taken during the consultations across complaints and for each category of complaint: the competence and performance total scores. Combination of scores with duration of consultations (efficiency-time score). Correlation between scores in the competence and performance part. RESULTS--Mean (SD) total score across complaints for competence was 49% higher than in the performance test (81.8 (11) compared with 54.7 (10.1), p less than 0.0001). The Pearson correlation across complaints between the competence total score and the performance total score of the participating physicians was -0.04 (not significant). When efficiency and consultation time of the consultations were taken into account, the correlation was 0.45 (p less than 0.01). CONCLUSIONS--Assessment of competence under examination circumstances can have predictive value for performance in actual practice only when factors such as efficiency and consultation time are taken into account. Below standard performance of physicians does not necessarily reflect a lack of competence. Performance and competence should be considered as distinct constructs.