In older patients, acute medical illness that requires hospitalization is a sentinel event that often precipitates disability. This results in the subsequent inability to live independently and complete basic activities of daily living (ADLs). This hospitalization-associated disability occurs in approximately one-third of patients older than 70 years of age and may be triggered even when the illness that necessitated the hospitalization is successfully treated. In this article, we describe risk factors and risk stratification tools that identify older adults at highest risk of hospitalization-associated disability. We describe hospital processes that may promote hospitalization-associated disability and models of care that have been developed to prevent it. Since recognition of functional status problems is an essential prerequisite to preventing and managing disability, we also describe a pragmatic approach toward functional status assessment in the hospital focused on evaluation of ADLs, mobility, and cognition. Based on studies of acute geriatric units, we describe interventions hospitals and clinicians can consider to prevent hospitalization-associated disability in patients. Finally, we describe approaches clinicians can implement to improve the quality of life of older adults who develop hospitalization-associated disability and that of their caregivers.