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Limited health literacy is common in the United States and associates with poor clinical outcomes. Little is known about the effect of health literacy in patients with advanced kidney disease. In this prospective cohort study we describe the prevalence of limited health literacy and examine its association with the risk for mortality in hemodialysis patients. We enrolled 480 incident chronic hemodialysis patients from 77 dialysis clinics between 2005 and 2007 and followed them until April 2008. Measured using the Rapid Estimate of Adult Literacy in Medicine, 32% of patients had limited (<9th grade reading level) and 68% had adequate health literacy (≥9th grade reading level). Limited health literacy was more likely in patients who were male and non-white and who had fewer years of education. Compared with adequate literacy, limited health literacy associated with a higher risk for death (HR 1.54; 95% CI 1.01 to 2.36) even after adjustment for age, sex, race, and diabetes. In summary, limited health literacy is common and associates with higher mortality in chronic hemodialysis patients. Addressing health literacy may improve survival for these patients.