The purpose of this study was to investigate transitions over time in the functional status of disabled community-living elderly. The study explored clinical and socio-demographic predictors of functional status decline. Data from the SIPA 3-year longitudinal study were analyzed (n=1164). Three categories of functional status were defined: no important disability, significant IADL disability and significant ADL disability. At baseline, results show that the prevalence rates were 26.9%, 58.6% and 14.5% for the three categories of functional status. After 12 months, about 50-60% of participants had remained in the same status, while some 10-15% of those with baseline significant disability had improved. The patterns of transitions between 12 and 36 months of follow-up were slightly different. The results indicated more deterioration (13-38%) and less improvement (6-9%). After controlling for baseline functional status, the best predictors for functional decline at 36 months were prior disability, functional limitations, cognitive impairment and comorbidity burden. We found that older adults' functional status may decline or improve even if the participants are disabled. Disabled conditions play a crucial role in the development of future disability and preventive actions need to be implemented.