Introduction: Leprosy is a chronic disease that affects skin and peripheral nerves. Disease complications include reactional episodes and physical impairment. One World Health Organization (WHO) goal of leprosy programs is to decrease the number of grade 2 impairment diagnoses by 2015. This study aims to evaluate clinical factors associated with the occurrence of leprosy reactions and physical impairment in leprosy patients. Methods: We conducted a retrospective study of data from medical records of patients followed in two important centers for the treatment of leprosy in Aracaju, Sergipe, Brazil, from 2005 to 2011. We used the chi-square test to analyze associations between the following categorical variables: gender, age, operational classifi cation, clinical forms, leprosy reactions, corticosteroid treatment, and physical impairment at the diagnosis and after cure. Clinical variables associated with multibacillary leprosy and/or reactional episodes and the presence of any grade of physical impairment after cure were evaluated using the logistic regression model. Results: We found that men were more affected by multibacillary forms, reactional episodes, and grade 2 physical impairment at diagnosis. Leprosy reactions were detected in a total of 40% of patients and all were treated with corticosteroids. However, physical impairment was observed in 29.8% of the patients analyzed at the end of the treatment and our multivariate analysis associated a low dose and short period of corticosteroid treatment with persistence of physical impairments. Conclusions: Physical impairment should receive an increased attention before and after treatment, and adequate treatment should be emphasized.