Aims and objectives: To delineate the trajectories of functional status over four time points and to examine predictors of functional decline (FD) in hospitalised older patients. Background: About 30–60% of the older patients develop new dependence in activities of daily living (ADL) during a hospital stay, which results in progressive disability after discharge. The functional trajectories and risk factors of FD among hospitalised older patients require identification. Design: A cohort study. Methods: The study consecutively recruited 273 patients aged 65 and older admitted to a medical centre in southern Taiwan. Functional trajectory, by ADL score, was observed at four time points: two weeks before admission, admission, discharge and three months after discharge. The ADL score two weeks before admission was used as a baseline functional status. Results: Eighty-three (30·4%) patients experienced FD at three months after discharge. Functional trajectory as shown by ADL scores indicated that all 273 patients dropped steeply at admission and that two-thirds were gradually restored three months after discharge. Logistic regression revealed that the number of falls in the past year, Instrument Activities of Daily Living (IADL) status before admission, comorbidity and ADL decline between preadmission and discharge were significant predictors of FD three months after discharge. The ADL score decline during hospitalisation was the mediator of FD three months after discharge. Conclusions: Findings indicate that the ADL function of those hospitalised older patients who reported having fallen more often in the previous year had more comorbidity, had a lower IADL score, and had more ADL score decline before admission and discharge would continue to decline after discharge. Relevance to clinical practice: Clinical nurses can integrate the finding of this study with Comprehensive Geriatric Assessment to tailor intervention to restore older patient's physical function during hospitalisation.