OBJECTIVES: This study aims to estimate health care cost and productivity loss and to measure the quality of life in patients with rheumatoid arthritis (RA), particularly by its functional class (FC) in the Korean health care setting.  METHODS: RA-associated costs were estimated from a societal perspective. Health care cost was estimated using data from National Health Insurance (NHI) Claims Database between January 1 and December 31, 2008. In order to estimate other health care costs, like traditional medicine and physiotherapy, that are not covered under the NHI and non-health care costs including transportation, health food and housekeeping services, face-to-face interviews were conducted for 202 patients with RA in a large teaching hospital in Seoul for 3 months starting from November 18, 2009. RA-related productivity loss and quality of life using EQ-5D were also estimated from the survey. Factors associated with costs as well as quality of life in RA patients were indentified using multiple regression and logistic regression. RESULTS: Total annual cost that RA patients incurred in 2009 was estimated to be $1.6 billion, of which almost a half was attributable to productivity loss. As the function of RA patients deteriorates, annual per capita cost showed an increasing trend (FC I: $3534, FC II: $6057, FC III: $6722, and FC IV: $6856) while quality of life was lowered (FC I: 0.673, FC II: 0.502, FC III: 0.294, and FC IV: 0.227). Annual per capita cost increased with the deterioration of function (p<0.05) and co-morbidity (p<0.1). The quality of life was positively correlated with functional class (p<0.05). CONCLUSIONS: RA patients not only incur high health care cost but also suffer from significant productivity loss and reduced quality of life in Korea. RA patients’ poor function is highly correlated with higher costs and lower quality of life.