The objective of this study was to analyze the factors associated with functional decline and improvement in a community-dwelling population of people aged 75 years and older. A representative sample of elderly people living at home in the crty of Sherbrooke (Qu6bec, Canada) was assessed yearly on three occasions (1991–1993) by a nurse. A health questionnaire, together with standardized instruments measuring disabilities, cognitive status, and depressive mood, was administered on the three assessments. From the 655 subjects who agreed to participate, a total of 504 subjects completed the study. The most important factors associated with functional decline were the number of days off regular activities (odds ratio (OR) = 1.31), the number of hot meals per day (OR = 1.59), and cognitive status (OR = 0.96), whereas weight loss (OR = 0.37) and living alone (OR = 0.54) were significant protective factors. Previous declines in functional autonomy, cognitive state, or mood were not independent risk factors. The most important factors associated with functional improvement were the disability score (OR = 1.08), previous functional decline (OR = 6.06), and decline in the disability score (OR = 1.09). Perceiving health to be worse than it was the previous year was a significant factor against improvement (OR = 0.24). This study identifies risk factors that can be helpful for targeting high-risk subgroups within the very elderly population who may benefit from a preventive program. Am J Epidemiol 1999; 150: 501-10.