OBJECTIVE: To examine the effect of disease-modifying antirheumatic drug (DMARD) therapy on hepatotoxicity among patients with rheumatoid arthritis (RA) and hepatitis C virus (HCV) infection. METHODS: We identified biologic and nonbiologic treatment episodes of patients with RA using the 1997-2011 national data from the US Veterans Health Administration. Eligible episodes had HCV infection (defined by detectable HCV RNA) and subsequently initiated a new biologic or nonbiologic DMARD. Cohort entry required a baseline alanine aminotransferase (ALT) < 66 IU/l and quantifiable HCV RNA within 90 days prior to starting biologic/DMARD therapy. The primary outcome of interest was hepatotoxicity, defined as ALT elevation ≥ 100 IU/l or increase in HCV RNA of 1 log or more, and was examined within the first year of biologic/DMARD use. Results were reported as the cumulative incidence of treatment episodes achieving predefined hepatotoxicity at 3, 6, and 12 months after biologic/DMARD initiation. RESULTS: RA patients with HCV (n = 748) were identified and contributed 1097 biologic/DMARD treatment episodes. Overall, ALT elevations were uncommon, with 37 (3.4%) hepatotoxicity events occurring within 12 months. Treatment episodes with biologic DMARD demonstrated more frequency of hepatotoxicity than did nonbiologic DMARD (4.8% vs 2.3%, p = 0.03). Among treatment episodes involving hepatotoxicity events, the majority occurred within 6 months of DMARD initiation (29/37, 78%). CONCLUSION: In US veterans with HCV and RA receiving biologic and nonbiologic DMARD, the frequency of hepatotoxicity (ALT ≥ 100 IU/l) was low, with a higher frequency observed in treatment episodes with current biologic use.