Contemporary breast cancer surgical procedures vary greatly by the amount of tissue removed, anesthesia time, and reconstruction. Despite historical literature comparing the health-related quality of life (HRQOL) after lumpectomy and mastectomy, HRQOL data are limited regarding contemporary surgical procedures. Further, biological processes (e.g., inflammation) associated with HRQOL outcomes have not been described. We conducted two studies to examine differences in post-operative physical and mental functioning, pain, fatigue, and systemic inflammatory markers including interleukin (IL)-6, tumor necrosis factor (TNF)-α, and C-reactive protein (CRP) in women with early-stage breast cancer. Study 1 assessed women before and after surgery (n = 27) and Study 2 used a large cross-sectional sample (n = 240) to confirm findings from Study 1 and included a no-surgery comparison group. In Study 1, women who received mastectomy had lower physical functioning than lumpectomy (ps < 0.05), and those who received bilateral mastectomy had worse pain (p < 0.01) and fatigue (p = 0.029) than lumpectomy. Results were replicated in Study 2: mastectomy groups exhibited poorer physical functioning (ps < 0.01) and greater pain (ps < 0.001) than lumpectomy, and bilateral mastectomy was associated with worse fatigue (p < 0.05). Women who received bilateral mastectomy had higher levels of CRP than lumpectomy (p < 0.01) and higher TNF-α than the no-surgery group (p < 0.05). All surgery groups exhibited higher IL-6 than no-surgery (ps < 0.05). More extensive surgery is associated with poorer postoperative HRQOL. As compared to lumpectomy and no-surgery, mastectomy is associated with higher concentrations of systemic inflammatory markers.