Purpose: Previous studies investigating adverse outcomes of hospitalized elders have focused on community-dwelling patients. Given the rapid growth of populations living in other settings, such as assisted living facilities, it is important to understand whether these patients are at higher risk of experiencing specific adverse outcomes during hospitalization, so that interventions can be developed to reduce risk. Methods: This is a prospective, observational study of 212 sequential patients admitted during a 1-month period in 2006 to a 38-bed Acute Care for Elders unit in Rochester, New York and followed until discharge. We categorized the patients by residence prior to admission (i.e., community, assisted living, and nursing home). Our outcome categories were: worsening function, delirium, depression, falls, pressure sores, and nursing home admission. Results: After adjusting for multiple characteristics, we found that patients admitted from assisted living facilities were at substantially higher risk than those admitted from the community for functional decline and falls. Patients from nursing homes had a trend toward increased risk for these outcomes, but the trend did not reach statistical significance. More than three fourths of assisted living facility residents were discharged to a nursing home after hospitalization, with a relative risk of 9.41 (p less than 0.001) versus community-dwellers for this outcome. Implications: People who are admitted to the hospital from assisted living facilities are at high risk for falls and functional decline during hospitalization. Assisted living residents are at a particularly high risk of nursing home admission following hospitalization. Targeted preventive programs should be developed with a goal of reducing risk in this vulnerable population.