To determine if postoperative pain is a predictor of functional outcomes for elderly hip fracture patients who were previously independent ambulators (with or without assistive device). Prospective comparative survey design. Convenience sample. 85 hip fracture patients age 65 years or older from two Midwestern urban hospital orthopaedic units. Subjects were interviewed between day 2 and 5 (M = 2.6) postoperatively and again 2 months postoperatively. Independent variables of cognitive status and pain status were measured using the Folstein Mini Mental State Exam (MMSE) and two pain measures, the Verbal Descriptor Scale (VDS) and Ferrell's Pain Experience Interview (FPEI). The dependent variable, functional outcome, was measured using the degree of assistance required for basic ADLs from Jette's Functional Status Index (FSI). Pain with movement was significantly higher than pain at rest (p < .0001). Mental status, pain report with movement (during hospital interview), illness severity, and age accounted for 51% of the variance in functional outcomes 2 months postoperatively. Undertreated postoperative pain contributes to poor functional outcomes. Pain assessment of postoperative older patients should be conducted during movement. Efforts to reduce postoperative pain severity in the immediate postoperative period may yield better functional outcomes months later.