OBJECTIVES: To examine the effects of decreasing hospital length of stay (HLOS) on change in functioning from prehospital admission to posthospital discharge in older cohorts. DESIGN: Cohort-sequential design. SETTING: Nationwide, older population-based Longitudinal Aging Study Amsterdam (LASA). PARTICIPANTS: Individuals aged 68 and older with any hospital admission according to national medical registry data: two 10-year age groups (68-77 (younger-old) and 78-87 (older-old)) in two periods (1996-99 (Period 1) and 2006-09 (Period 2)) (N = 1,212). MEASUREMENTS: HLOS was the main independent variable in multinomial logistic models, dichotomized as 1 to 5 days (short) and 6 days or longer (long). Outcomes were change scores in mobility and activities in daily living (ADLs). Respondents who died during the 3-year period were assigned to a third outcome category. RESULTS: Results for both age groups showed more hospital admissions and shorter median HLOS in Period 2 than Period 1 (P < .05). Lower odds of decline in physical functioning were found in respondents with short HLOS than in those with long HLOS (for mobility: odds ratio (OR) = 0.36, 95% confidence interval (CI) = 0.23-0.54 (younger-old) and OR = 0.47, 95% CI = 0.30-0.72 (older-old); for ADLs: OR = 0.30, 95% CI = 0.19-0.48 (younger-old) and OR = 0.30, 95% CI = 0.18-0.53 (older-old)). Adjusting for confounders did not significantly change these estimates. Period did not modify these associations. CONCLUSION: Because the associations of HLOS with change in mobility and ADLs were the same in both periods, hospitalized older adults had neither advantage nor disadvantage from the decrease in HLOS. In addition, in both age groups, a greater percentage experienced the better functional outcomes and lower mortality associated with short admissions, which suggests an advantage of the decrease in HLOS.