The comorbidity of psychiatric disorders with chronic health conditions has emerged as a topic of considerable clinical and policy interest, in part owing to the evidence that anxiety disorders themselves are associated with morbidity. However, the implications for health-related quality of life that result from anxiety disorders, which are comorbid to chronic medical or psychiatric illness, are not well understood, especially in primary care samples. A 2-year observational study of 875 adult patients with hypertension, diabetes, heart disease, and current depressive disorder or subthreshold depression receiving care from general medical providers was conducted. The unique effect of any comorbid anxiety disorder on functioning and well-being was estimated, as well as the differential impact at baseline, 2-year follow-up, and change over time, of any comorbid anxiety disorder for patients with chronic medical conditions or depression. Patients with comorbid anxiety who received general medical care had lower levels of functioning and well-being than those without comorbid anxiety. These differences were most pronounced in mental health-related quality-of-life measures and when anxiety was comorbid with chronic medical conditions rather than with depression. Hypertensive and diabetic patients with comorbid anxiety were as debilitated as patients with depression or heart disease, and this low health-related quality of life persisted over time. Comorbid anxiety had less of an effect on patients with heart disease who already had a low health-related quality of life. The finding of substantial differences in the quality of life between hypertensive and diabetic patients with and without comorbid anxiety disorder highlights the clinical and societal importance of identifying comorbid anxiety in these patients.