Multi-configuration pair-density functional theory (MC-PDFT) has proved to be a powerful way to combine the capabilities of multi-configuration self-consistent-field theory to represent the an electronic wave function with a highly efficient way to include dynamic correlation energy by density functional theory. All applications reported previously involved complete active space self-consistent-field (CASSCF) theory for the reference wave function. For treating large systems efficiently, it is necessary to ask whether good accuracy is retained when using less complete configuration interaction spaces. To answer this question, we present here calculations employing MC-PDFT with the separated pair (SP) approximation, which is a special case (defined in this article) of generalized active space self-consistent-field (GASSCF) theory in which no more than two orbitals are included in any GAS subspace and in which inter-subspace excitations are excluded. This special case of MC-PDFT will be called SP-PDFT. In SP-PDFT, the electronic kinetic energy and the classical Coulomb energy, the electronic density and its gradient, and the on-top pair density and its gradient are obtained from an SP approximation wave function; the electronic energy is then calculated from the first two of these quantities and an on-top density functional of the last four. The accuracy of the SP-PDFT method for predicting the structural properties and bond dissociation energies of twelve diatomic molecules and two triatomic molecules is compared to the SP approximation itself and to CASSCF, MC-PDFT based on CASSCF, CASSCF followed by second order perturbation theory (CASPT2), and Kohn-Sham density functional theory with the PBE exchange-correlation potential. We show that SP-PDFT reproduces the accuracy of MC-PDFT based on the corresponding CASSCF wave function for predicting C-H bond dissociation energies, the reaction barriers of pericyclic reactions and the properties of open-shell singlet systems, all at only a small fraction of the computational cost.