OBJECTIVES: To explore initially how low levels of physical activity influence lower body functional limitations in participants of the Longitudinal Study of Aging. Changes in functional limitations are used subsequently to predict transitions in the activities of daily living/instrumental activities of daily living (ADL/IADL) disability, thus investigating a potential pathway for how physical activity may delay the onset of ADL/IADL disability and, thus, prolong independent living. DESIGN: Analysis of a complex sample survey of US civilian, noninstitutionalized population aged 70 years and older in 1984, with repeated interviews in 1986, 1988, and 1990. SETTING AND PARTICIPANTS: Analyses concentrated on 5151 men and women targeted for interview at all four LSOA interviews. MEASUREMENTS: Characteristics used in analyses: gender, age, level of physical activity, comorbid conditions including the presence of hypertension, diabetes, arthritis, and atherosclerotic heart disease, levels of functional limitations, and ADL/IADL disability. RESULTS: Transitional models provide evidence that older adults who have varying levels of disability and who report at least a minimal level of physical activity experience a slower progression in functional limitations (OR = .45, P < .001 for severe vs less severe limitations). This low level of physical activity, through its influence on changes in functional limitations, is shown to slow the progression of ADL/IADL disability. CONCLUSIONS: Results from analyses provide supporting evidence that functional limitations can mediate the effect that physical activity has on ADL/IADL disability. These results contribute further to the increasing data that seem to suggest that physical activity can reduce the progression of disability in older adults.