OBJECTIVE: The authors determined the costs associated with generalized social anxiety disorder in a managed care setting. METHOD: A three-phase mail and telephone survey was conducted from July to October 1998 in two outpatient clinics of a large health maintenance organization (HMO). The survey assessed direct costs, indirect costs, health-related quality of life, and clinical severity associated with generalized social anxiety disorder, both alone and with comorbid psychopathology. RESULTS: The weighted prevalence rate of current generalized social anxiety disorder was 8.2%. In the past year, only 0.5% of subjects with generalized social anxiety disorder had been accurately diagnosed. Yet 44.1% had a mental health specialty visit or had been prescribed an antidepressant, and psychiatric comorbidity was found in 43.6%. Noncomorbid generalized social anxiety disorder was associated with significantly lower health-related quality of life, work productivity, and earnings and greater utilization of health services; generalized social anxiety disorder with comorbid psychopathology was even more disabling. Suicide was attempted by 21.9% of subjects with noncomorbid generalized social anxiety disorder. Persons with average-severity generalized social anxiety disorder had probabilities of graduating from college that were 10 percentage points lower, earned wages that were 10% lower, and had probabilities of holding a technical, professional, or managerial job that were 14 percentage points lower than the comparison group. CONCLUSIONS: In a community cohort of HMO members, generalized social anxiety disorder was rarely diagnosed or treated despite being highly prevalent and associated with significant direct and indirect costs, comorbid depression, and impairment.