The authors sought to determine the characteristics of individuals enrolled in adult day care who are most likely to enter a nursing home. The status of 201 adult day care participants was assessed at baseline and at least 3 years after baseline evaluation. Risk factors for nursing home entry were identified on the basis of staff and family caregiver reports, participant testing, chart review, and physician evaluations. Cox regression analyses of baseline data such as medical diagnoses, affect, and demographic information were used to identify risk factors for institutionalization. Multivariate Cox regression analysis identified depressed affect of the care recipient as an important predictor of institutionalization; other predictors were low frequency of socializing with relatives and friends, higher number of psychiatric diagnoses, and increased age. The findings highlight the importance of socialization and suggest that a focus on successful and reinforcing socialization should be an important component of adult day care programming. The results also suggest that addressing patient mental health variables may be important in delaying institutionalization in this population.