BACKGROUND AND PURPOSE: The determinants of function in people with osteoarthritis include both psychosocial and physiological variables. Studies that simultaneously integrate both domains are limited. The aim of this study was to determine the following in a sample of women with osteoarthritis (OA) of the knee: (1) the relationships among pathology (grade of OA of the knee), pain level, balance, and self-efficacy and (2) the relative effects of pathology, pain level, balance, and self-efficacy on function. SUBJECTS: Fifty community-dwelling women, 50 to 84 years of age (mean = 69.2, SD = 8.8), with symptoms of OA of the knee participated. METHODS: Radiographs, standardized questionnaires (the Western Ontario and McMaster Universities Osteoarthritis Index, the Arthritis Self-Efficacy Scale, the Functional Reach Test, and timed performance tests were used to quantify the variables. Bivariate analyses and stepwise multiple regression modeling with analysis of variance calculations for beta weight testing were used in data analysis. RESULTS: In regression analysis, functional self-efficacy and balance accounted for 42% of the variance in physical performance of function, whereas functional self-efficacy and pain accounted for 74% of the variance in self-report of functional difficulty. DISCUSSION AND CONCLUSION: Functional self-efficacy is an important factor affecting the functional performance outcome for people with OA of the knee. Suggestions are given to address self-efficacy in health care management.