In this study we investigate the association between rheumatoid arthritis and depression, and examine if the increase in depression among individuals with rheumatoid arthritis (RA) compared to individuals without RA, is attributable to poor ability to perform important daily occupations. The occupations of work, self care, leisure, rest and sleep were analysed, using regression analyses, to see which predicted depression. The participants were 143 adults with rheumatoid arthritis (RA) and 142 without RA. A daily and hourly record of occupations in which they were engaged was completed for seven days. The amount of time individuals spent in these five occupations, their perceived occupational competence, the value they attached to the occupation and basic demographic information (age, gender, marital status and employment status) were included in the analysis along with their depression score. Occupational competence (time spent in occupation x perceived performance) in work, self care, leisure and sleep was a strong mediator of depression. Having competence in rest was not important nor were any of the demographic variables except employment status. Occupational value (time spent in occupation x perceived value) of the five occupations was not a mediator.