Objectives: The aim of this study is to identify major factors associated with physical functioning among the Korean elderly. Methods: Data come from a survey of a nationally representative sample of 2,058 older people aged 60 years or elder living in the community. A hierarchical functioning scale was constructed, using upper and lower body mobility, IADLs, and ADLs. Socioeconomic characteristics, chronic conditions, measures of health status, health service use, and social support were analyzed to explore their influence on functioning. Polytomous logistic regression analysis was conducted to identify major contributing factors to different levels of functioning. Results: Persons of older age, female, with chronic diseases (heart disease, stroke, fracture/dislocation) were consistently more likely to show a higher degree of functional limitation. There were variations, however, among other factors; e.g., those with arthritis were more likely to be only mildly impaired, but not moderately or severely impaired. Conclusions: Older Korean adults living in the community with impaired functioning constitute persons with diverse characteristics. Policy and program activities need to address specific needs of older people in different functioning states.