We studied the initial course of daily functioning in multiple sclerosis (MS). A cohort of 156 recently diagnosed patients was prospectively followed for three years (five measurements). Domains of interest were neurological deficits, physical functioning, mental health, social functioning and general health. An a priori distinction was made between a relapse onset group (n = 128) and a non-relapse onset group (n = 28). At baseline, neurological deficits are relatively minor for most patients, 26.3% have aberrant physical functioning scores, 38.5% have aberrant social functioning scores, 9% have aberrant mental health scores and 25% have aberrant general health scores. The neurological deficits and physical functioning deteriorated significantly over time. This deterioration was more pronounced and clinically relevant in the non-relapse onset group only. Mental health showed a significant, but not clinically relevant deterioration over time. Social functioning and general health showed non-significant effects for time. It is concluded that in the initial stage of MS, when neurological deficits are relatively minor and mental health is relatively unaffected, patients in both groups experience limitations in daily functioning. Patients in the non-relapse onset group have progressive neurological symptoms that are accompanied by progressive limitations in physical functioning, but not by progressive limitations in the other domains. © 2005 Edward Arnold (Publishers) Ltd.