BACKGROUND: Malnutrition is common in hospitalized older people and may predict adverse outcomes. Previous studies of the relationship between nutritional status and hospital outcomes are limited by inadequate accounting for other potential predictors of adverse outcomes, the failure to consider functional outcomes, and the omission of clinical assessments of nutritional status. OBJECTIVE: To measure the relationship between a clinical assessment of nutritional status on hospital admission and subsequent mortality, functional dependence, and nursing home use. DESIGN: Prospective cohort study. SETTING: A tertiary care hospital. PATIENTS: A total of 369 patients at least 70 years old (mean age 80.3, 62% women) admitted to a general medical service. MEASUREMENTS: Nutritional status was measured with the Subjective Global Assessment, a validated measure of nutritional status based on historical and physical exam findings. Patients were classified as severely malnourished (generally at least a 10% weight loss over the previous 6 months and marked physical signs of malnutrition), moderately malnourished (generally a 5 to 10% weight loss and moderate physical signs), or well nourished. Vital status, independence in activities of daily living, and nursing home use were determined through patient or surrogate interview at admission and 90 days and 1 year after discharge. Indices of comorbidity and illness severity were determined from chart review. RESULTS: 219 patients (59.3%) were well nourished, 90 (24.4%) were moderately malnourished, and 60 (16.3%) were severely malnourished. Severely malnourished patients were more likely than moderately malnourished or well nourished patients to die by 90 days (31.7%, 23.3%, and 12.3%, respectively, P < .001) and 1 year (55.0%, 35.6%, and 27.9%, P < .001) after discharge. In logistic regression models controlling for acute illness severity, comorbidity, and functional status on admission, severely malnourished patients were more likely than well nourished patients to die within 1 year of discharge (OR = 2.83, 95% CI, 1.47-5.45), to be dependent in activities of daily living 3 months after discharge (OR = 2.81, 1.06-7.46), and to spend time in a nursing home during the year after discharge (OR = 3.22, 1.05-9.87). CONCLUSION: Malnutrition was common in hospitalized patients with medical illness and was associated with greater mortality, delayed functional recovery, and higher rates of nursing home use. These adverse outcomes were not explained by greater acute illness severity, comorbidity, or functional dependence in malnourished patients on hospital admission.