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Objective: We conducted a cost identification analysis on 164 consecutive patients with systemic lupus erythematosus (SLE) who entered the Montreal General Hospital Lupus Registry between January 1977 and January 1990, compared their costs to the population of Quebec, and determined the predictors of cost., Methods: In January 1990 and 1991, participants completed questionnaires on health services utilization and on employment history over the preceding 6 months, as well as on functional, psychological, and social well-being. The societal burden of SLE was determined in terms of direct costs (all resources consumed in patient care) and indirect costs (wages lost due to lack of work force participation because of morbidity)., Results: The mean total annual cost for 1989, as assessed in January 1990 and expressed in 1990 Canadian dollars, was $13,094. Although only 44% of the patients were fully employed, indirect costs were responsible for 54% of this total ($7,071). Ambulatory costs, primarily diagnostic procedures, medications, and visits to health care professionals, comprised 55% of direct costs ($3,331). The results of the 1990 cost determination were similar. On average, hospitalizations among SLE patients were 4 times more frequent than among the general population of Quebec (matched for age and sex), and the number of ambulatory visits to physicians was double that for the average resident of Quebec. Higher 1989 values of creatinine and a poorer level of physical functioning were the best predictors of higher 1990 direct costs (R2 = 0.29). A poorer SLE well-being score, a combination of education and employment status, and a weaker level of social support were the best predictors of higher indirect costs (R2 = 0.29)., Conclusion: The direct and indirect costs for patients with SLE are substantial, and their respective predictors are distinct. Direct costs arise from organic complications which induce functional disability. Predictors of indirect costs are potentially amenable to psychological or social interventions and may be more easily modified than the determinants of direct costs, thereby improving patient outcome while simultaneously reducing disease costs.