Ethnic variations that may influence the preferences and outcomes associated with prostate cancer treatment are not well delineated. Our objective was to evaluate prospectively preferences, optimism, involvement in care, and quality of life (QOL) in black and white veterans newly diagnosed with localized prostate cancer. A total of 95 men who identified themselves as black/African-American or white who had newly diagnosed, localized prostate cancer completed a "time trade-off" task to assess utilities for current health and mild, moderate, and severe functional impairment; importance rankings for attributes associated with prostate cancer (eg, urinary function); and baseline and follow-up measures of optimism, involvement in care, and QOL. Interviews were scheduled before treatment, and at 3 and 12 months after treatment. At baseline, both blacks and whites ranked pain, bowel, and bladder function as their most important concerns. Optimism, involvement in care, and QOL were similar. Utilities for mild impairment were lower for blacks than whites, but were similar for moderate and severe problems. Decline in QOL at 3 and 12 months compared to baseline occurred for both groups. However, even with adjustment for marital status, education level, and treatment, blacks had less increase in nausea and vomiting and more increase in difficulty with sexual interest and weight gain compared with whites. Black and white veterans entered localized prostate cancer treatment with similar priorities, optimism, and involvement in care. Quality-of-life declines were common to both groups during the first year after diagnosis, but ethnic variation occurred with respect to nausea and vomiting, sexual interest, and weight gain.