Purpose Despite extensive evidence for the treatment effectiveness of interdisciplinary functional restoration (FR) for chronic disabling occupational musculoskeletal disorders (CDOMD), there is little documentation on the cost-effectiveness of early rehabilitation using FR. Methods A total of 1,119 CDOMD patients were classified according to duration of disability on FR entry, corresponding to early rehabilitation (ER: 4–8 months of disability, N = 373), intermediate duration (ID: 9–18 months, N = 373), and delayed rehabilitation (DR: >18 months, N = 373). Groups were matched on sex, age, ethnicity, and injured musculoskeletal region. One-year post-rehabilitation outcomes included return-to-work, work retention and healthcare utilization. Economic analyses included a cost-effectiveness analysis of the FR program, and estimation of the total cost-of-illness. Results At 1-year post-rehabilitation, all groups were comparable on return-to-work (overall 88 %), work retention (overall 80 %), and additional healthcare utilization (overall, 2.2 % of patients received re-operations/new surgeries, 2 visits to new healthcare provider). Savings of up to 64 % in medical costs, and up to 80 % in disability benefits and productivity losses was associated with the ER group. The cost of rehabilitation was also up to 56 % lower when administered early. Overall, ER resulted in estimated cost savings of up to 72 % (or almost $170,000 per claim). Conclusions Duration of disability does not negatively impact objective work or healthcare utilization outcomes following interdisciplinary FR. However, early rehabilitation is more likely to be a cost-effective solution compared to cases that progress >8 months and receiving FR as a treatment of “last resort”.