The objective of this study was to estimate the prevalence of cognitive impairment (including cognitive impairment no dementia [CIND] and dementia) among Medicare fee-for-service beneficiaries who used outpatient physical therapy and to estimate the prevalence of cognitive impairment by measures that are relevant to rehabilitation practice. This cross-sectional analysis included 730 Medicare fee-for-service beneficiaries in the 2016 wave of the Health and Retirement Study with claims for outpatient physical therapy. Cognitive status, our primary variable of interest, was categorized as normal, CIND, or dementia using a validated approach, and population prevalence of cognitive impairment (CIND and dementia) was estimated by sociodemographic variables and Charlson comorbidity index score. Age-, gender- (man/woman), race-/ethnicity-adjusted population prevalence of CIND and dementia were also calculated for walking difficulty severity, presence of significant pain, self-reported fall history, moderate-vigorous physical activity (MVPA) ≤1×/week, and sleep disturbance frequency using multinomial logistic regression. Among Medicare beneficiaries with outpatient physical therapist claims, the prevalence of any cognitive impairment was 20.3% (CIND:15.2%, dementia:5.1%). Cognitive impairment was more prevalent among those who were older, Black, had lower education attainment, or higher Charlson comorbidity index scores. The adjusted population prevalence of cognitive impairment among those who reported difficulty walking across the room was 29.8%, difficulty walking 1 block was 25.9%, difficulty walking several blocks was 20.8%, and no difficulty walking was 16.3%. Additionally, prevalence of cognitive impairment among those with MVPA ≤1×/week was 27.1% and MVPA >1×/week was 14.1%. Cognitive impairment prevalence did not vary by significant pain, self-reported fall history, or sleep disturbance. One in 5 older adults who use outpatient physical therapist services have cognitive impairment. Furthermore, cognitive impairment is more common in older physical therapist patients who report worse physical function and less physical activity. Physical therapists should consider cognitive screening for vulnerable older adults to inform tailoring of clinical practice toward a patient's ability to remember and process rehabilitation recommendations.