PURPOSE: Patient-reported outcome measures (PROMs) with robust psychometric properties are key for healthcare and resource allocation decisions. Palliative Care (PC) presents challenges for PROM assessment including its holistic scope, patients’ poor health and uncertainty about suitable PROMs to capture the value of PC. The ICECAP-SCM capability-wellbeing questionnaire was developed for economic evaluations in PC but its psychometric information is limited. This study assessed the comparative validity of ICECAP-SCM in Austrian specialist PC settings. METHODS: The PallPROMs cohort study collected PROM data for quality-of-life or symptom and concern burden (ICECAP-SCM, EQ-5D-5L, IPOS) alongside clinician ratings at specialist PC units in 12 Austrian hospitals. We assessed the convergent validity and responsiveness based on pre-developed hypotheses, the known-groups validity of ICECAP-SCM and conducted exploratory factor analysis according to COSMIN guidelines. RESULTS: Of the 293 participating patients, 228 patients had complete PROM data (58% female, 90% cancer-diagnosis). ICECAP-SCM showed ceiling effects (67–85%) in all domains except physical and emotional suffering. As hypothesized, it had moderate correlations with IPOS (r=-0.35) and EQ-5D-5L (r = 0.35), though the correlation with IPOS was weaker than with EQ-5D-5L. ICECAP-SCM effectively discriminated between patients with different symptom severity levels, and showed responsiveness to improvements. A four-factor structure was identified, with EQ-5D-5L loading on three factors and ICECAP-SCM and IPOS on all four factors. CONCLUSION: This study provides evidence of the validity of ICECAP-SCM in specialist PC units. It confirms its ability to provide a broader, more holistic wellbeing information than EQ-5D-5L. However, observed ceiling effects may limit its applicability. SUPPLEMENTARY INFORMATION: The online version contains supplementary material available at 10.1007/s11136-025-04032-8.