Objective: To study the effect of an incident wrist fracture on functional status in women enrolled in the Study of Osteoporotic Fractures. Design: Prospective cohort study. Setting: Baltimore, Minneapolis, Portland, and the Monongahela valley in Pennsylvania, USA Participants: 6107 women aged 65 years and older without previous wrist or hip fracture recruited from the community between September 1986 and October 1988. Main outcome measure: Clinically important functional decline, defined as a functional deterioration of 5 points in five activities of daily living each scored from 0 to 3 (equivalent to one standard deviation decrease in functional ability). Results: Over a mean follow-up of 7.6 years, 268 women had an incident wrist fracture and 41 (15%) of these developed clinically important functional decline. Compared with women without wrist fractures, those with incident wrist fractures had greater annual functional decline after adjustment for age, body mass index, and health status. Occurrence of a wrist fracture increased the odds of having a clinically important functional decline by 48% (odds ratio 1.48, 95% confidence interval 1.04 to 2.12), even after adjustment for age, body mass index, health status, baseline functional status, lifestyle factors, comorbidities, and neuromuscular function. Conclusions: Wrist fractures contribute to clinically important functional decline in older women.