The Model for End-Stage Liver Disease (MELD) score predicts higher transplant healthcare utilization and costs; however, the independent contribution of functional status towards costs is understudied. The study objective was to evaluate the association between functional status, as measured by Karnofsky Performance Status (KPS), and liver transplant (LT) costs in the first posttransplant year. In a cohort of 598 LT recipients from July 1, 2009 to November 30, 2014, multivariable models assessed associations between KPS and outcomes. LT recipients needing full assistance (KPS 10%-40%) vs being independent (KPS 80%-100%) were more likely to be discharged to a rehabilitation facility after LT (22% vs 3%) and be rehospitalized within the first posttransplant year (78% vs 57%), all P < .001. In adjusted generalized linear models, in addition to MELD (P < .001), factors independently associated with higher 1-year post-LT transplant costs were older age, poor functional status (KPS 10%-40%), living donor LT, pre-LT hemodialysis, and the donor risk index (all P < .001). One-year survival for patients in the top cost decile was 83% vs 93% for the rest of the cohort (log rank P < .001). Functional status is an important determinant of posttransplant resource utilization; therefore, standardized measurements of functional status should be considered to optimize candidate selection and outcomes.