The purpose of this study was to investigate factors associated with quality of life (QoL) early in treatment in a cohort of incident (i.e. newly diagnosed) dialysis patients. This multicenter study investigated QoL reported by patients on chronic hemodialysis (HD) and peritoneal dialysis (PD) at approximately 60 days following the start of treatment. QoL was assessed by the Medical Outcomes Study Short-Form 36 (MOS-SF 36) and by disease-targeted scales from the Kidney Disease Quality of Life (KDQOL). Patient's QoL as measured by the SF-36 was substantially impaired compared to norms for the general population. In univariate analyses, patients' QoL scores were related to demographic variables (age, race, sex, educational level), clinical variables (predialysis BUN and serum creatinine, primary diagnosis of diabetes, cardiovascular comorbidity, average hematocrit and serum albumin in first months of treatment), dialysis variables (HD/PD modality, PD dialysis adequacy, facility patient-staff ratio) and patient's level of usual exercise activity. In multivariate analyses, the most important independent QoL predictor was patient's usual level of exercise activity. Exercise activity independently predicted two performance measures of physical functioning, maximal gait speed and repeated chair rises, as well as patient-perceived physical functioning. Continued study of patient outcomes in relation to adequacy of delivered dialysis, early versus late diagnosis of chronic renal failure (CRF), and patient's usual exercise activity is important because these variables can be the focus for intervention strategies to prevent early deterioration in dialysis patients' functional health status.