Background: The study was conducted to examine the relationships between functional decline, health risk factors, lifestyle practices, and demographic variables in two culturally diverse, community-based samples of White and Japanese American older adults. Design: The study was an analysis of data from two ongoing studies of aging and dementia in King County, Washington. Functional status at baseline was evaluated, and factors associated with functional decline over a 4-year follow-up period were identified. The sample included 1,083 Japanese American and 1,011 White cognitively intact, community-dwelling adults aged 65 and older, who had no functional limitations at baseline and participated in at least one follow-up examination. Results: In 4 years of follow-up, 70% of the subjects reported no increase in functional limitation, and fewer than 5% of subjects declined in five or more activities. Risk factors associated with functional decline included increased age, female gender, medical comorbidity (particularly cerebrovascular disease, arthritis, and hypertension), elevated body mass index, poorer self-perceived health, and smoking. Depression and diabetes were also significant for persons with the greatest functional decline over the 4-year follow-up. Japanese speakers were significantly less likely to decline over the follow-up period than White or English-speaking Japanese American subjects. However, Japanese speakers were more likely to discontinue participation during the follow-up period, and may also have been more likely to underreport symptoms of functional decline. Conclusions: The present study provides further support that healthy lifestyle practices and prevention of chronic disease are important for maintaining functional independence in older adults. Japanese-speaking subjects were less likely to decline over time, although this could be due in part to differential dropout and reporting bias. These findings have important implications for the design and interpretation of longitudinal studies of older adults. Researchers interested in the effects of ethnicity on health and aging should be cognizant of differences in recruitment and enrollment strategies among studies, and the ways in which these affect study findings. This study also demonstrates the importance of devoting adequate resources to minimize dropouts, and of including measures of health and functioning that are culturally equivalent and less reliant on self-report data.