Aim: Despite effective treatment for recent hepatitis C (HCV) infection, side-effects and adherence concerns limit its use among people who inject drugs (PWID). This study evaluated health-related quality of life (HRQoL) and social functioning following infection and during recent HCV treatment. Methods: The Australian Trial of Acute Hepatitis C studied the natural history and treatment of recent HCV infection. HRQoL (SF-12v2) and social functioning (Opiate Treatment Index score) were measured over 48 weeks and their impact on treatment uptake, adherence and virological response were assessed. Results: Of 163 participants, 111 received treatment (HCV n = 74, SVR 55%; HCV/HIV n = 37, SVR 74%). 116 (71%) were male, 124 (76%) ever injected drugs, with 55 (36%) injecting recently and 28/55 (51%) reported needle/syringe sharing. At baseline, median physical and mental HRQoL was 54 units (IQR 46-58) and 46 (35-54) (reference median: 50), respectively, and median social functioning score was 11 units (7-17). Higher social function (<10 vs ≥15) predicted increased treatment uptake (AOR 3.43, 95%CI 1.01-11.6, p = 0.048) and higher SVR (AOR 5.11, 95%CI 1.30-20.15, p = 0.020). After adjustment, treated participants had lower physical (-4.90 units, 95%CI -6.33 to -3.48, p<0.001) and mental HRQoL (-3.7 units, 95%CI -5.55 to -1.86, p<0.001) at on-treatment visits, but HRQoL returned to baseline levels during follow-up. Conclusions: Social functioning can predict recent HCV treatment uptake and SVR. Efforts to maximise social stability may improve treatment response. Pegylated-interferon treatment is associated with reduced HRQoL on-treatment in an already vulnerable population of PWID that would be better served by interferon-free regimens particularly in treated target at PWID to prevent transmission. Trial Registration: ClinicalTrials.gov NCT00192569.