Identifying predictors of functional limitations among the elderly is essential for planning and implementing appropriate preventive services. The purpose of this prospective study was to examine baseline physical activity as a predictor of health and functional ability outcomes 5 years later in people age 75 and 80 years at baseline. A clear trend was observed: The more physically active subjects had better health and functional ability compared to their more sedentary counterparts. After controlling for the baseline status, the degree of physical activity did not predict future disability but still maintained its predictive role at the level of disease severity. It is suggested that the level of habitual physical activity is an important predictor of health and functional ability among elderly people. Presumably, however, there is a reciprocal causal relationship between physical activity and health in elderly people. Physical activity counseling should therefore be included in preventive health strategies for the elderly.