The anemia of chronic disease (ACD) is characterized by macrophage iron retention induced by cytokines and the master regulator hepcidin. Hepcidin controls cellular iron efflux on binding to the iron export protein ferroportin. Many patients, however, present with both ACD and iron deficiency anemia (ACD/IDA), the latter resulting from chronic blood loss. We used a rat model of ACD resulting from chronic arthritis and mimicked ACD/IDA by additional phlebotomy to define differing iron-regulatory pathways. Iron retention during inflammation occurs in macrophages and the spleen, but not in the liver. In rats and humans with ACD, serum hepcidin concentrations are elevated, which is paralleled by reduced duodenal and macrophage expression of ferroportin. Individuals with ACD/IDA have significantly lower hepcidin levels than ACD subjects, and ACD/IDA persons, in contrast to ACD subjects, were able to absorb dietary iron from the gut and to mobilize iron from macrophages. Circulating hepcidin levels affect iron traffic in ACD and ACD/IDA and are more responsive to the erythropoietic demands for iron than to inflammation. Hepcidin determination may aid to differentiate between ACD and ACD/IDA and in selecting appropriate therapy for these patients.