Objective. To provide Canadian estimates of health care utilization costs associated with rheumatoid arthritis (RA)-related and non-RA-related care within 4 treatment strategies and in different physical functioning categories. Methods. In the Alberta Rheumatoid Arthritis Biologics Pharmacosurveillance Program, clinical data were linked with provincial health care administrative databases to estimate health care costs. A propensity score matching technique was used to evaluate annual costs across 4 treatment strategies: 1) remaining on disease-modifying antirheumatic drugs and not progressing to therapy with a biologic agent (n = 75), 2) progressing to biologic agents (n = 68), 3) initiation and stabilization on a first anti-tumor necrosis factor agent (n = 731), or 4) requiring a switch to another biologic agent (n = 212). Costs were examined across levels of function and by cost attribution category (directly related to RA or not). Results. Of 1,222 patients, 1,086 had at least 3 months of administrative data. The mean annual total cost per patient was $5,531 (median $2,568), and $2,349 (median $0) was accounted for by hospitalizations, $1,716 (median $1,358) by physician visits, and $1,465 (median $949) by emergency room and other outpatient visits. Of these costs, 41% was directly related to RA itself or associated comorbidities. The importance of physical function as a determinant of health care utilization was evident, with the annual mean cost for those with low functional disability as measured by a Health Assessment Questionnaire (HAQ) score <0.5 was $4,157 compared to $14,225 for those with a HAQ score >2.0 indicating high disability. Conclusion. Health care costs for RA can be minimized by aiming for better disease control and maintaining physical function.