Objective: To investigate the role of early magnetic resonance imaging (MRI) of the wrist in predicting functional outcome in rheumatoid arthritis. Methods: MRI scans of the dominant wrist were scored for synovitis, tendon inflammation, bone oedema, and erosion at first presentation (n = 42), at 1 year (n = 42), and at 6 years (n = 31). At 8 years, clinical reassessment (n = 28) was undertaken. Tendon function was graded 0-3 for movement, tendon sheath swelling, and pain on resistance at nine flexor and extensor tendons of the hand. Hand function was also assessed using the Sollerman grip test. The requirement for joint or tendon surgery by 8 years was determined by telephone survey in 39 of the original 42 patients. Results: At 8 years, tendon function was highly correlated with hand function (Sollerman score, R = 20.51, p = 0.005) and global function (health assessment questionnaire score, R = 0.53, p = 0.004). Using a model incorporating baseline and 1 year MRI scores, the MRI bone oedema score was strongly predictive of tendon function at 8 years (x 2 2 = 15.3, p = 0.0005), as was the MRI bone erosion score (x 2 2 = 9.23, p = 0.01). Hand function was also predicted by the baseline MRI erosion score (p = 0.02). MRI variables did not predict the requirement for surgery, but patients who had surgery were more likely to show progression of MRI bone erosion scores between baseline and 1 year (p = 0.008). Conclusions: Extensive MRI bone oedema and erosions at the wrist in early rheumatoid arthritis predict tendon dysfunction and impaired hand function in the medium term but not the requirement for joint or tendon surgery.