BACKGROUND: Many older adults become dependent in one or more activities of daily living (ADLs: dressing, bathing, transferring, eating, toileting) when hospitalized, and their prognosis after discharge is unclear. OBJECTIVE: To develop a prognostic index to estimate one-year probabilities of recovery, dependence or death in older hospitalized patients who are discharged with incident ADL dependence. DESIGN: Retrospective cohort study. PARTICIPANTS: 449 adults aged ≥ 70 years hospitalized for acute illness and discharged with incident ADL dependence. MAIN MEASURES: Potential predictors included demographics (age, sex, race, education, marital status), functional measures (ADL dependencies, instrumental activities of daily living [IADL] dependencies, walking ability), chronic conditions (e.g., congestive heart failure, dementia, cancer), reason for admission (e.g., neurologic, cardiovascular), and laboratory values (creatinine, albumin, hematocrit). Multinomial logistic regression was used to develop a prognostic index for estimating the probabilities of recovery, disability or death over 1 year. Discrimination of the index was assessed for each outcome based on the c statistic. KEY RESULTS: During the year following hospitalization, 36 % of patients recovered, 27 % remained dependent and 37 % died. Key predictors of recovery, dependence or death were age, sex, number of IADL dependencies 2 weeks prior to admission, number of ADL dependencies at discharge, dementia, cancer, number of other chronic conditions, reason for admission, and creatinine levels. The final prognostic index had good to excellent discrimination for all three outcomes based on the c statistic (recovery: 0.81, dependence: 0.72, death: 0.78). CONCLUSIONS: This index accurately estimated the probabilities of recovery, dependence or death in adults aged 70 years or older who were discharged with incident disability following hospitalization. This tool may be useful in clinical settings to guide care discussions and inform decision-making related to post-hospitalization care. © 2012 Society of General Internal Medicine.