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Background This paper focuses on the transition to supported employment for people with intellectual disabilities paying particular attention to the impact of job breakdown on psychological well-being; an issue often omitted from studies. Materials and Methods Forty-nine people with intellectual disabilities were interviewed within 3 months of entering supported employment and 9–12 months later. Data collection involved in-depth interviews with people with intellectual disabilities, their carers and employers and completion of a self-report measure of depression and anxiety (an adapted form of the Hospital Anxiety and Depression Scale), and a self-report measure of quality of life (the ComQol). Results By time of the follow-up interviews, 13 of the 49 jobs had broken down. Analysis of scores measuring quality of life, anxiety and depression showed no effect for loss of employment. However, interviews with participants indicated that job loss had a considerable impact on those affected. Conclusions There were a wide range of reasons for job breakdown, many of which were particular to the circumstances of people with intellectual disabilities. Although job breakdown does not have an impact of anxiety or depression many participants found job loss traumatic. [ABSTRACT FROM AUTHOR]