The invention provides methods and kits for diagnosing severity of particular types of inflammatory diseases, such as rheumatic diseases, by assessing protein levels of follistatin-like protein 1 (FSTL-1). The level of FSTL-1 protein present in the serum or synovial fluid of individuals suspected of having certain inflammatory disease (e.g, rheumatoid arthritis) is positively correlated with the severity of the disease.