We have investigated the accuracy of pseudopotential (PSP) density-function
al calculations with respect to the corresponding all-electron (AE) results
for a variety of atoms and small molecules. It is found that most of the d
eviations between ab-initio PSP and AE calculations are due to the lineariz
ation of the exchange-correlation functional within the PSP approach. This
problem can be eliminated by applying nonlinear core corrections (NLCC). We
find that a correct description of spin-polarized states requires the NLCC
, even for first-row atoms. This is essential for simulations of magnetic s
ystems and reaction processes which involve radicals. The NLCC is also esse
ntial for a realistic description of elements with more long-range core sta
tes such as alkali atoms. A further improvement of pseudopotential accuracy
may be achieved by explicitly including semi-core stales in the calculatio
n.