The aim of this study was to examine functional disability of older persons in long-term care facilities and to identify factors associated with their levels of functioning. The first national survey of older residents in nursing and residential care homes in Korea was conducted in 1999. Of the 1105 respondents who completed the interview 73% in residential care homes and 88% in nursing homes reported limitations in functioning. The percentage of persons with three or more limitations in activities of daily living (ADL) was 63% among nursing home residents and 36% among those at residential care homes. Overall, persons of older age, female, widowed, with less family support, and bearing out-of-pocket costs of medical care tended to show higher levels of disability. Presence of arthritis, hypertension, and stroke was found to be significantly associated with increased likelihood of disability. Multivariate analysis revealed variability in the associations by type of facility. Characteristics such as older age, women, and stroke were significantly associated with a higher likelihood of disability for those in both residential and nursing homes. Arthritis, fracture, exercise, and contact with family members, however, were found to be independently associated with disability among those in residential care homes only. Recent government proposals to improve care delivered to long-term care residents need to take into account their differing levels of functional disability and its associated care needs.