Alcohol consumption has both adverse and beneficial effects on survival. We examined the baseline status of alcohol consumption and the changes of instrumental activity of daily living (I-ADL) by a prospective survey for the elderly living in an urban community who were participants in the "Longitudinal and Interdisciplinary Study on Aging by the Tokyo Metropolitan Institute of Gerontology (TMIG-LISA)". Detailed information on alcohol intake was collected during a structured interview. At a baseline survey in 1991, 1) the frequency of current drinkers decreased lineally by age. 2) the most popular alcohol beverage was beer for both sexes and average ethanol intake per day were 41 (10-45) g in men and 24 (8-28) g in women. Current drinkers had significantly stronger grip strength, higher velocity in maximum walking and higher score on the TMIG Index of Competence, designed to measure the higher-level competence in elderly community residents. After 4 years follow-up, in 1995, 73.3 percent of the participants completed the examination. They were classified into five categories as "current drinkers", "lifetime abstainers", "beginning to drink during follow-up period", "quit drinking during follow-up period" and "quit drinking at baseline". The decline of I-ADL was significantly greater among the elderly who "quit drinking during follow-up period" than "current drinkers". Further "current drinkers" had significantly lower decline of I-ADL than "lifetime abstainers". Our findings show beneficial effects of moderate alcohol intake in the maintenance of a higher level of competence in the elderly living in a community.