Most heart failure (HF) patients are older adults. However, the association of functional status and outcomes in ambulatory older adults with chronic HF has not been well studied. Of the 7788 Digitalis Investigation Group (DIG) trial participants, 4036 were > or =65 years. Of these, 1369 (34%) had New York Heart Association (NYHA) class III-IV symptoms. We calculated propensity scores for NYHA III-IV symptoms for all 4036 patients using a non-parsimonious logistic regression model. We used propensity scores to match 1010 (74% of 1369) NYHA III-IV patients with 1010 of NYHA I-II patients. Kaplan-Meier and matched Cox proportion hazard analyses were used to estimate associations of NYHA class III-IV with mortality and hospitalizations. Patients had a mean age of 73 years, 31% were female, and 11% were nonwhites. All-cause mortality occurred in 394 (rate, 1385/10000 person-years) NYHA I-II and 452 (rate, 1654/10000 person-years) NYHA III-IV patients, respectively, during 2967 and 2733 years of follow up (hazard ratio: {HR}, 1.28; 95% confidence interval {CI}, 1.09-1.50; p=0.002). NYHA III-IV class was associated with increased cardiovascular (HR, 1.25; 95% CI, 1.04-1.49; p=0.016) and HF mortality (HR, 1.51; 95% CI, 1.16-1.97; p=0.002). NYHA III-IV class was not significantly associated with hospitalizations due to all causes (HR, 1.10; 95% CI, 0.96-1.25; p=0.165), cardiovascular causes (HR, 1.11; 95% CI, 0.96-1.29; p=0.150), or worsening HF (HR, 1.09, 95% CI, 0.92-1.30; p=0.330). Baseline NYHA functional class was associated with mortality but not with hospitalization in ambulatory older adults with chronic HF.