The TPS7E81 requires an output capacitor of 2.2μF or larger (1.0μF or larger capacitance) for stability and an equivalent series resistance (ESR) between 0.0Ω and 1Ω. For best transient performance, use X5R- and X7R-type ceramic capacitors because these capacitors have minimal variation in value and ESR over temperature. When choosing a capacitor for a specific application, be mindful of the DC bias characteristics for the capacitor. Higher output voltages cause a significant derating of the capacitor. For best performance, the maximum recommended output capacitance is 100μF.

Although an input capacitor is not required for stability, good analog design practice is to connect a capacitor from IN to GND. Some input supplies have a high impedance, thus placing the input capacitor on the input supply helps reduce the input impedance. This capacitor counteracts reactive input sources and improves transient response, input ripple, and PSRR. If the input supply has a high impedance over a large range of frequencies, several input capacitors can be used in parallel to lower the impedance over frequency. Use a higher-value capacitor if large, fast, rise-time load transients are anticipated, or if the device is located several inches from the input power source.