An approach to treat static correlation within a density-functional framework is presented. To that end, a multiconfiguration optimized effective potential (MCOEP) method is derived. In contrast to standard multiconfiguration self-consistent field (MCSCF) methods and previous combinations of MCSCF procedures with density-functional theory, the MCOEP method yields well-defined physically meaningful orbital and eigenvalue spectra. In addition to the electronic ground state also excited electronic states can be described. The MCOEP method is implemented invoking the localized Hartree–Fock approximation, leading to a multiconfiguration localized Hartree–Fock approach. Applications of the new method to the dissociation of the hydrogen molecule and the isomerization of ethene and cyclobutadiene show that it is capable of describing situations that are characterized by strong static correlation