The 'European east--west health divide' has been documented both for mortality and for self-rated health. The reason for this divide, however, remains to be explained. The aim of this study is, firstly, to investigate whether in 1995-97 differences in self-rated health persisted between countries in central and eastern Europe, the former Soviet Union, and western Europe. A further aim is to try to explain these differences with reference to people's financial status and social capital. This study found substantial differences in self-rated health between countries in western Europe, in central and eastern Europe, and in the former Soviet Union (where self-rated health seems to be poorest in general). There were also substantial differences between areas in terms of economic and social capital, with western Europe doing better in all the analysed circumstances. In economic terms people in the former Soviet Union seemed to be more dissatisfied than those living in central and eastern Europe. When one looks at differences in social capital between the two post-communist areas the picture is more mixed. Economic satisfaction was demonstrated to have a strong and significant effect on people's self-rated health, with a higher satisfaction reducing the odds of 'poor' health. When this factor was controlled for the area, differences in self-rated health were reduced dramatically, for both men and women. Organisational activity (men only), trust in people, and confidence in the legal system also reduced the odds of 'less than good health', but were not as important in explaining the health differences between areas. One can conclude that economic factors as well as some aspects of social capital play a role for area differences in self-rated health. Of these it would appear that economic factors are the more important.