To investigate (1) the prevalence of physical restraints and psychoactive medication, (2) newly administered physical restraints, frequency of application of the devices and frequency of psychoactive medication on demand during 12-month follow-up and (3) characteristics associated with restraint use in nursing homes. High quality data on restraint use in German nursing homes are lacking so far. Such information is the basis for interventions to achieve a restraint-free care. Cross-sectional study and prospective cohort study. Thirty nursing homes with 2367 residents in Hamburg, Germany. External investigators obtained prevalence of physical restraints by direct observation on three occasions on one day, psychoactive drugs were extracted from residents' records and prospective data were documented by nurses. Residents' mean age was 86 years, 81% were female. Prevalence of residents with at least one physical restraint was 26.2% [95% confidence interval (CI) 21.3-31.1]. Centre prevalence ranged from 4.4 to 58.9%. Bedrails were most often used (in 24.5% of residents), fixed tables, belts and other restraints were rare. Prevalence of residents with at least one psychoactive drug was 52.4% (95% CI 48.7-56.1). The proportion of residents with at least one physical restraint after the first observation week of 26.3% (21.3-31.3) cumulated to 39.5% (33.3-45.7) at the end of follow-up (10.4 SD 3.3 months). The relative frequency of observation days with at least one device ranged from 4.9-64.8% between centres. No characteristic was found to explain centre differences. The frequency of physical restraints and psychoactive drugs in German nursing homes is substantial. Pronounced centre variation suggests that standard care is possible without restraints. Effective restraint minimisation approaches are urgently warranted. An evidence-based guideline may overcome centre differences towards a restraint-free nursing home care.