We sought to understand how diagnosis with HIV affects health-related quality of life. We assessed health-related quality of life using utility-based measures in a Department of Veterans Affairs (VA) clinic and a University-based clinic. Respondents assessed health-related quality of life regarding their current health, and retrospectively assessed their health 1 month prior to and 2 months after diagnosis with HIV infection. Sixty-six patients completed the study. The overall mean utilities for health 1 month before and 2 months after diagnosis were 0.87 (standard error 0.037), and 0.80 (0.043) (p0.005 by rank sign test), but the effect of diagnosis differed between the two clinics, with a substantial decrease in the university clinic and a small non-significant decrease in the VA clinic. The overall mean utility for current health was 0.85 (0.034), assessed on average 7.5 years after diagnosis. When asked directly whether diagnosis of HIV decreased health-related quality of life, 47% agreed, but 35% stated that HIV diagnosis positively affected health-related quality of life. Diagnosis with HIV decreased health-related quality of life at 2 months on average, but this effect diminished over time, and differed among patient populations. Years after diagnosis, although half of the patients believed that diagnosis reduced health-related quality of life, one-third reported improved health-related quality of life.