OBJECTIVE: To determine the annual direct, indirect and total costs and predictors of costs in patients with systemic lupus erythematosus (SLE). METHODS: One hundred and five patients with SLE completed questionnaires on health-care utilization and employment history. Predictors of costs were determined by multiple regression analyses using direct, indirect and total costs as outcome variables. Demographics, health status, disease activity, end-organ damage, social support and satisfaction with care were used as predictor variables. RESULTS: The mean annual total cost per patient was pounds sterling 7913. Direct costs were a third and indirect costs two-thirds of the total cost. Higher education level, greater disease activity and lower physical functioning were associated with higher direct, indirect and total costs. Higher direct costs were also associated with greater damage and younger age. CONCLUSION: SLE has a considerable impact on the health-care system and society. Improvement in disease activity and physical health and prevention of end-organ damage may reduce costs in SLE.