OBJECTIVES: The purpose of this investigation was to study the role of dementia and other common age-related diseases as determinants of dependence in activities of daily living (ADL) in the elderly. METHODS: The study population consisted of 1745 persons, aged 75 years and older, living in a district of Stockholm. They were examined at baseline and after a 3-year follow-up interval. Katz's index was used to measure functional status. Functional dependence at baseline, functional decline, and development of functional dependence at follow-up were examined in relation to sociodemographic characteristics and chronic conditions. RESULTS: At baseline, factors associated with functional dependence were age, dementia, cerebrovascular disease, heart disease, and hip fracture. However, only age and dementia were associated with the development of functional dependence and decline after 3 years. In a similar analysis, including only nondemented subjects. Mini-Mental State Examination scores emerged as one of the strongest determinants. The population attributable risk percentage of dementia in the development of functional dependence was 49%. CONCLUSIONS: In a very old population, dementia and cognitive impairment make the strongest contribution to both the development of long-term functional dependence and decline in function.