Background: The low benefit coverage rate of South Korea’s health security system causes catastrophic health expenditure. And catastrophic health expenditure can be the cause of the transition to and persistence of poverty. This study was conducted to ascertain the effect of catastrophic health expenditure on the transition to and persistence of poverty, using 6 years of the Korea Welfare Panel Study Data. Methods: This study was conducted among the 22,528 households that participated in the Korea Welfare Panel Study, 2007-2012. Catastrophic health expenditure was defined as equal to or exceeds thresholds (10%, 20%, 30%, and 40%) of household’s capacity to pay. The effect of catastrophic health expenditure on the transition to and persistence of poverty was ascertained via multivariate logistic regression. Results: Four-point-seven percent to 20.6% of the households are facing catastrophic health expenditure. Rates of the transition to (relative risk [RR], 18.6 to 30.2) and persistence of (RR, 74.8 to 76.0) poverty of households facing catastrophic health expenditure was higher than households not facing catastrophic health expenditure. Even after adjusting the characteristics of the household and the household head, catastrophic health expenditure was found to affect transition to (odds ratio [OR], 2.11 to 3.04) and persistence of (OR, 1.53 to 1.70) poverty. Conclusion: To prevent catastrophic health expenditure and transition to and persistence of poverty resulting from catastrophic health expenditure, the reinforcement of South Korea’s health security system including the benefit coverage enhancement is required.