Background. The study objectives were (a) to describe the occurrence, types, and preventability of adverse drug events (ADEs) in hospitalized patients 70 years of age and older; (b) to examine the association between potential risk factors and ADEs; and (c) to examine the relationship of an ADE occurrence and hospital length of stay (LOS) and functional decline. Method. Consecutive general medical admissions (n = 157) of community-dwelling persons were prospectively monitored daily for ADE occurrence. Admission assessment included demographic factors, cognition, preadmission medication use, and functional status. Discharge assessment included functional status, LOS, discharge diagnoses, and medication use during the hospitalization. Results. Twenty-three patients (14.6%) experienced 28 probable ADEs, of which 54.2% (13/24) were judged to be potentially preventable. Patients experiencing an ADE had a significantly lower mean Mini-Mental State Examination score (23.6 ± 4.3 vs 25.5 ± 3.6, p = .039) and were prescribed significantly more new inpatient medications (4.0 ± 2.3 vs 2.6 ± 1.7, p = .01) compared to non-ADE patients. Age, gender, functional status prior to admission, percent with more than four active diagnoses, or number of preadmission medications were not associated with ADE status. Upon discharge, 50.0% of ADE patients experienced a decline in one or more activities of daily living (ADLs), compared with 24.1% of non-ADE patients (p = .017). ADE patients had a longer LOS (8.7 ± 4.9 vs 6.6 ± 3.0 days, p = .022) compared to non-ADE patients. Conclusions. ADEs were associated with number of new inpatient medications and admission cognitive status, but not demographic, disease, or physical function variables. Patients experiencing an ADE were more likely to experience a longer LOS and to decline in ADL function. ADEs may be one factor contributing to functional decline during hospitalization. Future research in this area should include larger samples and multivariable analyses controlling for potential confounders.