To quantify the risk and severity of negative effects of treatment for localised prostate cancer on long term quality of life. Population based, prospective cohort study with follow-up over three years. New South Wales, Australia. Men with localised prostate cancer were eligible if aged less than 70 years, diagnosed between October 2000 and October 2002, and notified to the New South Wales central cancer registry. Controls were randomly selected from the New South Wales electoral roll and matched to cases by age and postcode. General health specific and disease specific function up to three years after diagnosis, according to the 12 item short form health survey and the University of California, Los Angeles prostate cancer index. 1642 (64%) cases and 495 (63%) eligible and contacted controls took part in the study. After adjustment for confounders, all active treatment groups had low odds of having better sexual function than controls, in particular men on androgen deprivation therapy (adjusted odds ratio (OR) 0.02, 95% CI 0.01 to 0.07). Men treated surgically reported the worst urinary function (adjusted OR 0.17, 95% CI 0.13 to 0.22). Bowel function was poorest in cases who had external beam radiotherapy (adjusted OR 0.44, 95% CI 0.30 to 0.64). General physical and mental health scores were similar across treatment groups, but poorest in men who had androgen deprivation therapy. The various treatments for localised prostate cancer each have persistent effects on quality of life. Sexual dysfunction three years after diagnosis was common in all treatment groups, whereas poor urinary function was less common. Bowel function was most compromised in those who had external beam radiotherapy. Men with prostate cancer and the clinicians who treat them should be aware of the effects of treatment on quality of life, and weigh them up against the patient's age and the risk of progression of prostate cancer if untreated to make informed decisions about treatment.