CAS-DFT is presented as a method that allows an economical simultaneous treatment of static and dynamic correlation effects in molecules with multi-reference character. Central problems of CAS-DFT concern the double counting of dynamic correlation effects and the choice of the proper input quantities for the DFT functional. Also, the question of treating both active and inactive orbitals in a consistent way is discussed. Test calculations with CAS-DFT for the ring opening of dioxirane and the excitation energies of methylene prove that the method works reasonably. q 2000 Elsevier Science B.V. All rights reserved.