The objective of this study was to examine the validity of the revised version of the Edmonton Functional Assessment Tool (EFAT-2), which was designed to measure physical impairment and functional performance of patients in palliative care. The EFAT-2 was administered to 275 patients on admission to an acute palliative care unit. Principal-components factor analysis was performed on the 10 items of the scale, and Cronbach's alpha was calculated to measure internal consistency. A one-way analysis of variance (ANOVA) was carried out to compare the admission EFAT-2 scores of three groups of patients: (a) deceased on the unit, (b) transferred to a continuing care palliative unit, (c) discharged home. Two main factors were revealed: physical and non-physical (cognitive/affective). Pain was identified as an independent item and did not correlate with any other item. Cronbach's alpha was 0.86. The ANOVA was significant (F [2,267] 29.063, p < 0.001). The results suggest that the EFAT-2 measures one construct. They also suggest that the EFAT-2 is able to discriminate between palliative care patients based on discharge location.