The current study evaluated the incidence and determinants of physical disability in a contemporary, nationally representative sample of U.S. military veterans. Data were analyzed from the National Health and Resilience in Veterans Study, a nationally representative, prospective cohort study of 1,686 veterans aged 55 years and older. Waves 1 and 2 were conducted in 2011 and 2013, respectively. Potential determinants of incident disability in activities of daily living (ADL; e.g., bathing, dressing) and instrumental activities of daily living (IADL; e.g., food preparation, medication adherence) were assessed at Wave 1, and included sociodemographic characteristics, and risk (e.g., medical conditions, psychiatric distress), and protective psychosocial (e.g., psychological resilience, purpose in life) factors. The two-year incidence of any physical disability (ADL or IADL) among veterans aged 55 years and older was 11.5%, and the incidence of ADL and IADL disability was 3.0% and 11.4%, respectively. Older age, being married/cohabiting, and number of medical conditions-specifically, diabetes, heart attack, and chronic pain-were associated with an increased risk of any incident physical disability and incident IADL disability (adjusted odds ratio [AOR] range: 1.10-3.10). Retirement was associated with an increased risk of incident ADL disability (AOR: 7.53, 95% CI: 1.37-41.51). Purpose in life was found to be protective for incident IADL disability (AOR: 0.93, 95% CI: 0.87-0.99). Although greater medical burden is associated with increased incidence of physical disability in U.S. veterans, results of this study suggest that initiatives designed to foster greater purpose in life may help protect against the development of physical disability in this rapidly growing segment of the population.