This study aimed to determine the frequency of rheumatoid factor (RF) and cyclic citrullinated peptide (CCP) antibodies in a cohort of patients with palindromic rheumatism (PR) and to find determinants for progression to rheumatoid arthritis (RA). All new cases of PR (n = 90) were included prospectively and followed up for 1 year, and a comparison group of RA cases (n = 70) was also included. At study entry in all patients in both groups, RF and anti-CCP antibodies were tested, and the findings were compared and correlated. In the PR group at presentation, RF was positive in 30 patients (33.3 %) and, in the RA group, in 45 patients (64.3 %). Anti-CCP antibodies were positive in 35 patients (38.9 %) with PR and in 58 patients (82.9 %) with RA. In the PR group, positive correlations were observed between RF and C-reactive protein (CRP) (p = 0.036), while anti-CCP positively correlated with disease duration (p = 0.015) and CRP (p < 0.001). At 1-year follow-up, 25 cases (27.5 %) had progressed to RA, 3 (3.3 %) cases had developed systemic lupus, 43 cases had responded to hydroxychloroquine with complete remission, five cases had developed other rheumatic diseases, and 14 cases had progressed to undifferentiated arthritis. After regression analysis, the involvement of hand joints and positive anti-CCP were the only predictors that determined progression into RA within a year (p < 0.001 and p = 0.02, respectively). Early hand joint involvement and positive anti-CCP at disease onset are good predictors for progression to RA in this domain.