Direct observation of physical function has the advantage of providing an objective, quantifiable measure of functional capabilities. We have developed the Physical Performance Test (PPT), which assesses multiple domains of physical function using observed performance of tasks that simulate activities of daily living of various degrees of difficulty. Two versions are presented: a nine-item scale that includes writing a sentence, simulated eating, turning 360 degrees, putting on and removing a jacket, lifting a book and putting it on a shelf, picking up a penny from the floor, a 50-foot walk test, and climbing stairs (scored as two items); and a seven-item scale that does not include stairs. The PPT can be completed in less than 10 minutes and requires only a few simple props. We then tested the validity of PPT using 183 subjects (mean age, 79 years) in six settings including four clinical practices (one of Parkinson's disease patients), a board-and-care home, and a senior citizens' apartment. The PPT was reliable (Cronbach's alpha = 0.87 and 0.79, interrater reliability = 0.99 and 0.93 for the nine-item and seven-item tests, respectively) and demonstrated concurrent validity with self-reported measures of physical function. Scores on the PPT for both scales were highly correlated (.50 to .80) with modified Rosow-Breslau, Instrumental and Basic Activities of Daily Living scales, and Tinetti gait score. Scores on the PPT were more moderately correlated with self-reported health status, cognitive status, and mental health (.24 to .47), and negatively with age (-.24 and -.18). Thus, the PPT also demonstrated construct validity. The PPT is a promising objective measurement of physical function, but its clinical and research value for screening, monitoring, and prediction will have to be determined.