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Background Hospital workers are at high risk of work-related musculoskeletal disorders (WRMSDs), but outcomes following such injuries have not been well studied longitudinally.Aims To ascertain functional recovery in hospital workers following incident WRMSDs and identify predictors of functional status.Methods Cases (incident WRMSD) and matched referents from two hospitals were studied at baseline and at 2 year follow-up for health status [SF-12 physical component summary (PCS)], lost workdays, self-rated work effectiveness and work status change (job change or work cessation). Predictors included WRMSD and baseline demographics, socio-economic status (SES), job-related strain and effort–reward imbalance. Logistic regression analysis tested longitudinal predictors of adverse functional status.Results The WRMSD-associated risk of poor (lowest quartile) PCS was attenuated from a baseline odds ratio (OR) of 5.2 [95% confidence interval (CI) 3.5–7.5] to a follow-up OR of 1.5 (95% CI 1.0–2.3) and was reduced further in multivariate modelling (OR = 1.4; 95% CI 0.9–2.2). At follow-up, WRMSD status did not predict significantly increased likelihood of lost workdays, decreased effectiveness or work status change. In multivariate modelling, lowest quintile SES predicted poor PCS (OR = 2.0; 95% CI 1.0–4.0) and work status change (OR = 2.5; 95% CI 1.1–5.8). High combined baseline job strain/effort–reward imbalance predicted poor PCS (OR = 1.7; 95% CI 1.1–2.7) and reduced work effectiveness (OR = 2.6; 95% CI 1.6–4.2) at follow-up.Conclusions Baseline functional deficits associated with incident WRMSDs were largely resolved by 2 year follow-up. Nonetheless, lower SES and higher combined job strain/effort–reward imbalance predicted adverse outcomes, controlling for WRMSDs.