In materials with strong electron correlation the proper treatment of local atomic physics described by orbital occupations is crucial. Reduced density-matrix functional theory is a natural extension of density functional theory for systems that are dominated by orbital physics. We review the current state of reduced density-matrix functional theory (RDMFT). For atomic structure relaxations or ab-initio molecular dynamics the combination of density functional theory (DFT) and dynamical mean-field theory (DMFT) possesses a number of disadvantages, like the cumbersome evaluation of forces. We therefore describe a method, DFT+RDMFT, that combines many-particle effects based on reduced density-matrix functional theory with a density functional-like framework. A recent development is the construction of density-matrix functionals directly from many-particle theory such as methods from quantum chemistry or many-particle Green's functions. We present the underlying exact theorems and describe current progress towards quantitative functionals.

Common density-matrix functionals, the Muller and the power functional, have been benchmarked for the half-filled Hubbard dimer, which allows us to model the bond dissociation problem and the transition from the weakly to the strongly correlated limit. Unbiased numerical calculations are combined with analytical results. Despite the well known successes of the Muller functional, the ground state is degenerate with a one-dimensional manifold of ferromagnetic solutions. The resulting infinite magnetic susceptibility indicates another qualitative flaw of the Muller functional. The derivative discontinuity with respect to particle number is not present indicating an incorrect metal-like behavior. The power functional actually favors the ferromagnetic state for weak interaction. Analogous to the Hartree-Fock approximation, the power functional undergoes a transition beyond a critical interaction strength, in this case, however, to a noncollinear antiferromagnetic state.

We discuss an open quantum system approach for the evaluation of reduced density-matrix functional in the local approximation that approximates a correlated electron system by a correlated impurity. Using a resolvent approach, we calculate the impurity density matrix and from this the density-matrix functional.