BACKGROUND:With the increase of the statutory retirement age, the number of self-employed older workers will most likely increase. Therefore, this study aimed to explore: 1) the differences in self-rated health and work ability of self-employed workers and employees, 1) whether self-employment is associated with better self-rated health and work ability across three years, than employment, and 3) the role of sociodemographic, health- and work-related characteristics (e.g., mental load, physical load, and autonomy) in these relationships. METHODS:Data was used from the Study on Transitions in Employment, Ability and Motivation, where self-employed (n = 1,029) and employees (n = 12,055) aged 45-64 years were followed during 2010-2013. Linear regression and generalized estimating equations analyses were carried out to study the differences in self-rated health and work ability (i.e., self-assessed work ability in relation to an individual's resources and work demands) of self-employed and employees. To explore the role of sociodemographic, health-and work-related characteristics in these associations, we included interaction terms between these characteristics and employment status. RESULTS:The self-employed had better work ability (8.3 versus 8.2), and better self-rated health (3.4 versus 3.3) than employees. Work ability of self-employed improved over time, compared to the changes over time in work ability among employees, but not no difference in change over time in self-rated health was found. None of the interaction terms were statistically significant (p>0.05). CONCLUSION:We observed higher scores in self-rated health and work ability among the self-employed than employees. Being self-employed leads to an increase in work ability across three years. The differences in work ability can be considered small, and more research is needed to establish the role of self-employment as a potential facilitator for sustainable employment.