Objectives To determine whether mildly impaired physical function (based on performance-based assessment) is associated with development of dementia of the Alzheimer’s type (DAT) in cognitively normal older adults. Design Longitudinal, observational study with yearly assessments of physical and cognitive function. Mean follow-up was 5 years. Setting Knight Alzheimer’s Disease Research Center at Washington University, St. Louis, Missouri. Participants Four hundred thirty-five cognitively normal adults aged 60 and older participating in longitudinal studies of aging. Measurements Survival analyses were used to examine whether scores on the 9-item Physical Performance Test (PPT) predicted time to DAT diagnosis. Cox proportional hazards models were used to examine associations between PPT total scores and time to cognitive impairment and DAT; as well as the association between time and these events, adjusting for and simultaneously testing the effects of age, sex, education, and presence of one or more apolipoprotein (APOE) ε4 alleles. Results During the follow-up period, 81 participants developed DAT. Participants diagnosed with DAT were older (81.0 vs 74.2, P =.001) and had worse performance on the PPT (25.5 vs 28.1, P =.009) than those who remained cognitively normal. Time to DAT diagnosis was associated with PPT total score (hazard ratio (HR) = 0.89, 95% confidence interval (CI) = 0.86-0.93, P <.001) such that time to DAT diagnosis was longer for participants with higher physical performance scores. In the adjusted analysis, PPT score significantly predicted time to DAT diagnosis (HR = 0.94, 95% CI = 0.89-0.99, P =.02). Conclusion Mild physical impairment in cognitively normal older adults is associated with subsequent development of DAT. Although the physical impairment may be sufficiently mild that it is recognized only using performance-based assessments, its presence may predate clinically detectable cognitive decline. © 2013, Copyright the Authors Journal compilation © 2013, The American Geriatrics Society.