Objective Studies linking health literacy to outcomes in rheumatoid arthritis (RA) have been underpowered and have not adequately accounted for confounders. We examined the association of health literacy with functional status in 6,052 subjects participating in a prospective observational study, controlling for numerous important covariates. Methods Using linear regression, we analyzed the cross-sectional association of health literacy, as measured by 2 validated single-item literacy screening questions (SILS1 and SILS2), and functional status, assessed by the Health Assessment Questionnaire (HAQ) disability index. Subjects reported demographics, comorbidities, social support, educational attainment, visual problems, and memory problems, as well as use of prednisone, disease-modifying antirheumatic drugs, and biologic agents. Each SILS measure was forced into the final model. Results Low health literacy was present in 7.0% and 4.3% of subjects (per SILS1 and SILS2, respectively). When controlling for all covariates, low health literacy was associated with a 0.376-point greater HAQ score, compared to subjects with adequate health literacy (95% confidence interval 0.306, 0.447; P < 0.001). This relationship persisted, even after modeling educational attainment. Results were similar for the 2 SILS instruments. Low health literacy was also associated with poorer self-reported adherence to RA medications. Visual and memory problems were associated with worse functional status. Conclusion Health literacy was more strongly associated with functional status than prednisone use, smoking history, and biologic agent use, and independent of educational attainment. Health literacy may play an important role in understanding functional status in RA patients. Single-item questions amenable to use in the clinical setting may identify subjects with low health literacy, who are at risk for poor RA outcomes.