Difficulty performing activities of daily living ("functional impairment") is common in homeless adults aged 50 and older. However, little is known about the trajectory of these impairments, nor the extent to which these trajectories are similar to those of older adults in the general population. We identified trajectories of functional impairment in homeless adults aged 50 and older, and risk factors for differing trajectories. We conducted a prospective cohort study of 350 homeless adults, aged 50 and older, recruited via population-based sampling in Oakland, California and interviewed at 6-month intervals for up to 3 years. We assessed functional trajectories based on self-reported difficulty performing 5 activities of daily living. We used multivariable multinomial logistic regression to identify baseline risk factors for each trajectory. At baseline, participants' mean age was 58 years (SD, 5.3), 24.1% were women, 80.9% were African American, and 38.6% had difficulty performing 1 or more activities of daily living. We identified 4 distinct functional trajectories: minimal impairment in 136 participants (41.1%); persistent impairment in 81 (25.4%); partial improvement in 74 (23.5%); and decline in 28 (10.0%). Risk factors for persistent impairment included falls in the 6 months before baseline, depressive symptoms, and low physical performance. Although functional impairment improved in some homeless adults, it persisted or worsened in many others. These findings suggest that, similar to older adults in the general population, functional impairment among older homeless persons is not a transient phenomenon, but instead a chronic issue requiring long-term solutions.