Insight into older adults' physical resilience is needed to predict functional recovery after hospitalization. We assessed functional trajectories in response to acute illness and subsequent hospitalization and investigated baseline variables and dynamic variables associated with these trajectories. Prospective observational cohort study (Hospitalization-Associated Disability and impact on daily Life Study). This study included 207 older adults (aged 79.8 ± 6.9years, 49% female, 57% frail) acutely hospitalized in 6 Dutch hospitals. Functional disability was assessed using the 15-item modified activities of daily living index retrospectively 2weeks before admission, and prospectively from admission up to 3months after discharge. Baseline variables including frailty, somatic, physical, and psychosocial factors were assessed at admission. Dynamic variables (step count, pain, fatigue, and fear of falling) were continuously or repeatedly assessed during hospitalization. We performed individual spline modeling using random effects. Baseline variables and within-person mean levels and variability in the dynamic variables were assessed as predictors of functional trajectories. Functional disability significantly increased before admission and decreased from admission to 3months post discharge. Frail participants had a significantly higher increase in functional disability before admission compared with nonfrail participants. Lower step count, higher pain scores, and higher within-person variability in fear of falling were significantly associated with higher increase in functional disability before admission. Higher within-person variability in fear of falling was associated with more recovery. Older adults increase in functional disability before hospitalization and start to recover from admission onward. Frailty and dynamic variables are associated with a higher increase in functional disability after acute illness. Our findings give more insight into older adults' physical resilience, which may improve the prediction of functional recovery and may improve therapeutic decision-making and rehabilitation strategies to improve functional recovery after acute hospitalization.