Objective. To determine the clinical presentation and clinical and radiological outcome of early psoriatic arthritis (PsA) at 1 and 2 yr. Methods. Patients with PsA were assessed at the St. Vincent’s University Hospital Early Synovitis Clinic. Standardized clinical and laboratory assessment was performed at presentation and 1- and 2-yr follow-up. Radiographs of the hands and feet were evaluated in chronological order by two trained observers using the Sharp method modified to include the distal interphalangeal (DIP) joints. Results. A total of 129 (12.7%) of 1018 patients were diagnosed with PsA [mean age at onset of arthritis was 40.4 yr (range 11–76); mean duration of disease was 9.9 months (range 0.3–48); 52 oligoarticular, 77 polyarticular]. Means and standard deviations of indices of disease activity at presentation were: 10-cm visual analogue scale = 4.8 ± 2.7, HAQ score = 0.71 ± 0.64, ACR functional class III/IV = 41 (35%), Ritchie Articular Index = 5.6 ± 6, swollen joint count = 6.9 ± 8, erythrocyte sedimentation rate = 24 ± 26.4 mm/h, C-reactive protein = 27.6 ± 58.5 mg/l. At presentation, 49 (38%) patients had peripheral enthesopathy, 13 patients (10%) had inflammatory spine pain and 50 (39%) patients had DIP involvement. A total of 119 had psoriasis at the time of presentation [plaque psoriasis in 112 (94%), mean age of psoriasis onset was 29.8 ± 16.2 yr, nail dystrophy present in 78 patients (67%)]. At 1 yr of follow-up, 119 (92%) patients were reassessed and 70 (59%) were taking a disease-modifying anti-rheumatic drug (DMARD). At 2 yr, 97 (75%) patients were reassessed and 54 (56%) were taking a DMARD. Despite considerable improvement in inflammation and function scores, only 31 (26%) patients were in remission at 1 yr with 20 (21%) in remission at 2 yr. There was a low rate of DMARD-free remission [14 (12%) at 1 yr and 11 (11%) at 2 yr]. Radiographs of hands and feet were obtained for 117 (91%) patients at presentation and 86 (67%) patients at a median follow-up of 24 months (range 11–56); 47% of patients had joint erosions in hands or feet at follow-up with a mean Sharp erosion score of 3 (0) ± 5.2 (range 0–25) and a mean Sharp narrowing score of 3.2 (0) ± 7.5 (range 0–48). Conclusion. This study confirms that PsA is a chronic, progressive disease in the majority of patients. Despite clinical improvement with current DMARD treatment, PsA results in radiological damage in up to 47% of patients at a median interval of 2 yr.