Purpose: Researchers know little about the physical performance ability of residential care/assisted living (RC/AL) residents and its relationship to adverse outcomes such as fracture, nursing home placement, functional decline, and death. The purposes of this article are to (a) describe the functional characteristics of RC/AL residents, (b) examine the relationships between resident- and facility-level characteristics and physical performance, and (c) determine the predictive value of physical performance for adverse outcomes. Design and Methods: Data came from 1,791 residents in 189 RC/AL facilities participating in the Collaborative Studies of Long-Term Care. At baseline, residents were tested on four performance measures (grip strength, chair rise, balance, and walking speed), and other resident- and facility-level information was collected. Adverse outcomes were measured over 1 year. Results: Average grip strength was 14 [plus or minus] 7 kg, 61% of residents walked less than 0.6 m/s (M = 0.41 m/s), 26% could perform five chair rises, and only 19% could perform a tandem stand for a least 1 s. Multivariable analyses showed that more cognitive and functional impairment, depressive symptoms and comorbid conditions, and for-profit ownership were associated with poorer physical performance. Controlling for individual characteristics, we found that better performance on the four physical performance measures was associated with a reduced risk of nursing home placement, fracture, and decline in function over 1 year. Implications: Simple performance measures identify modifiable functional deficits and suggest targeted interventions to prolong independent mobility and aging in place in RC/AL facilities.