The aim of the study was to determine the prospective association between baseline benzodiazepine use and mobility, functioning, and pain among urban and rural African-American and non-Hispanic white community-dwelling older adults. From 1999 to 2001, a cohort of 1,000 community-dwelling adults, aged ≥65 years, representing a random sample of Medicare beneficiaries, stratified by ethnicity, sex, and urban/rural residence were recruited. Benzodiazepine use was assessed at an in-home visit. Every six months thereafter, study outcomes were assessed via telephone for 8.5-years. Mobility was assessed with the Life-Space Assessment. Functioning was quantified with level of difficulty in five basic activities of daily living (ADL: bathing, dressing, transferring, toileting, eating), and six instrumental activities of daily living (shopping, managing money, preparing meals, light and heavy housework, telephone use). Pain was measured by frequency per week and the magnitude of interference with daily tasks. All analytic models were adjusted for relevant covariates and mental health symptoms. After multivariable adjustment, baseline benzodiazepine use was significantly associated with greater difficulty with basic ADL (Estimate. =. 0.39, 95%CI: 0.04. -. 0.74), and more frequent pain (Estimate. =. 0.41, 95%CI: 0.09. -. 0.74) in the total sample and declines in mobility among rural residents (Estimate. =. -0.67, t(5,902)= -1.98, p= .048), over 8.5 years. Benzodiazepine use was prospectively associated with greater risk for basic ADL difficulties and frequent pain among African-American and non-Hispanic white community-dwelling older adults, and life-space mobility declines among rural-dwellers, independently of relevant covariates. These findings highlight the potential long-term negative impact of benzodiazepine use among community-dwelling older adults.