Purpose of the Study: To identify risk factors for early nursing home placement (NHP) in Alzheimer's disease (AD), focusing on the impact of longitudinal change in cognition, activities of daily living (ADL), service utilization, and cholinesterase inhibitor treatment (ChEI). Design and Methods: In an open, 3-year, prospective, multicenter study in a routine clinical setting, 880 AD patients were treated with either donepezil, rivastigmine, or galantamine. At baseline and every 6 months, they were assessed with several rating scales including Mini-Mental State Examination, Instrumental Activities of Daily Living scale (IADL), and Physical Self-Maintenance scale. Moreover, the dose of ChEI, the amount of weekly assistance (home help service and adult day care), and the date of NHP were recorded. Cox regression models were constructed to predict the risk of NHP. Results: During the study, 206 patients (23%) were admitted to nursing homes. Factors that precipitated institutionalization were lower cognitive and functional abilities at baseline, faster rate of decline in IADLs, female gender, solitary living, and a lower mean dose of ChEI. The men living alone and patients with a substantial increase in adult day care also demonstrated shorter time to NHP. Implications: The rate of functional but not cognitive decline was a strong risk factor for NHP. The results could be used to identify the care recipients that might risk early NHP to ensure that these individuals receive a sufficient level of assistance. Furthermore, higher doses of ChEI might postpone institutionalization in AD.