Tumour necrosis factor (TNF)-alpha plays a key role in the pathogenesis of rheumatoid arthritis (RA). It binds to two receptors, namely TNF receptor (TNFR)I and TNFRII. Several studies have suggested an association between TNFRII 196R/R genotype and RA. The objective of the present study was to evaluate the predictive value of the TNFRII 196R allele for RA diagnosis and prognosis in a cohort of patients with very early arthritis. We followed up a total of 278 patients recruited from the community, who had swelling of at least two joints that had persisted for longer than 4 weeks but had been evolving for less than 6 months, and who had not received disease-modifying antirheumatic drugs or steroid therapy. At 2 years, patients were classified according to the American College of Rheumatology criteria. All patients were genotyped with respect to TNFRII 196M/R polymorphism. Radiographs of hands and feet (read according to the modified Sharp method) and the Health Assessment Questionnaire were used to quantify structural and functional severity. The cohort of 278 patients was found to include 156 and 122 RA and non-RA patients, respectively. The TNFRII 196R allele was found to be associated with RA (P = 0.002). However, progression of radiographic severity and Health Assessment Questionnaire scores over 1 year did not differ between carriers of the 196R allele and noncarriers. Our findings suggest that the TNFRII 196R allele may be associated with RA diagnosis but that it does not predict early radiographic progression or functional severity in patients with very early, unclassified arthritis.