PURPOSE: To explore the relationship between upper extremity nerve damage and activity participation, pain, depression, and perceived quality of life. METHODS: A total of 49 patients with upper extremity nerve damage completed standardized measures of activity participation, pain, depression, and quality of life. We analyzed scores for all subjects and for 2 diagnostic groups: patients with compressive neuropathy and patients with nerve injury (laceration, tumor, and brachial plexus injury), and explored predictors of overall quality of life. RESULTS: Participants had given up 21% of their previous daily activities; greater activity loss was reported in patients with nerve injury. Pain was moderate and 39% had signs of clinical depression. Physical and psychological quality of life ratings were below the norms. Activity loss was strongly associated with higher levels of depression and lower physical and psychological quality of life. Higher depression scores correlated strongly with lower overall quality of life. Greater pain correlated moderately with higher depression scores and weakly with quality of life; no statistical relationship was found between pain and physical quality of life. Activity participation and depression predicted 61% of the variance in overall quality of life in patients with nerve damage. CONCLUSIONS: The results of this study suggest that hand surgeons and therapists caring for patients with nerve compression and nerve injury should discuss strategies to improve activity participation, and decrease pain and depression, to improve overall effect on quality of life throughout the recovery process. Depression screening and referral when indicated should be included in the overall treatment plan for patients with upper extremity nerve damage. TYPE OF STUDY/LEVEL OF EVIDENCE: Prognostic IV.