To describe the changes in basic activities of daily living (BADL) function before and during hospital admission in older patients admitted to an acute medical unit and to assess the effect of age on loss of BADL function. Prospective observational study. The study included 91 patients aged 65 and older consecutively admitted to an acute medical unit of an urban public teaching hospital in Portugal, between May and September 2017. Functional status was measured at three times: at hospital admission; at about 2 weeks before hospital admission (baseline); an on the discharge day. The functional condition was evaluated using the Katz index. Differences in scores for BADL between baseline and admission, between admission and discharge, and between baseline and discharge were used to define pre-admission, in-hospital and overall functional decline. Pre-admission, in-hospital and overall functional decline occurred in 78.0%, 4.4% and 63.7% of the participants, respectively. In contrast, in-hospital functional improvement occurred in a minority of the patients (14.3%). Hospitalized older people are discharged with BADL function that is worse than their baseline function. The oldest patients are at high risk of poorer functional outcomes because they are less likely to recover BADL function lost before admission. These results emphasize the overriding need for implementing in-hospital processes to prevent functional decline and enhance functional recovery. This study also highlights the need for nurses to closely monitor the functional status of hospitalized older people, particularly in oldest-old patients.