Justifying involuntary psychiatric treatment on the basis of a judgment that a person lacks capacity is controversial because there are questions about the meaning and utility of the concept in this context. There are complexities to using capacity in this way, which are further amplified in the community outpatient setting compared with acute inpatient care. A richer account of capacity, its meanings, and practical applications in context, is required. This qualitative study sought to build inductively a model of capacity in the context of involuntary outpatient psychiatric treatment, based on 38 interviews with stakeholders from New South Wales, Australia. The emergent model incorporates multiple “capacities”: to manage illness, for self-care, and to maintain social roles. It identifies core values that correspond with the “capabilities approach,” elaborating the justifications and processes of involuntary outpatient psychiatric treatment. This proposed model of “capability” may have a range of benefits to sound and ethical practice and scrutiny of systems of involuntary outpatient treatment.