Alcohol use by older adults is common, yet the risks and/or benefits of drinking, especially moderate drinking, are not well understood. Heavy drinking is a well-established factor in causing disability and excessive mortality among all age groups, including the elderly. However, literature is emerging that suggests that among elders with chronic medical and emotional health disorders, even modest alcohol consumption can lead to excessive disability and poorer perceived health. This article reviews the current literature on alcohol use and the relationship to common health problems in late life and suggests a model for examining the interaction of alcohol use and disability. Implications for intervention development are also discussed.