Background Intrinsic capacity (IC) is a new concept in the healthy ageing field and has many operationalised definitions. In this study, we operationalised IC using item response theory in the English Longitudinal Study of Ageing (ELSA) and tested the predictive value of the scale using subsequent functional ability, mortality, and hospital admission. Methods IC was measured at baseline (2004, Wave 2) using 14 dichotomous indicators: word recall, orientation in time, balance, chair rises, walking speed, upper mobility, lower mobility, eyesight, hearing, grip strength, BMI, waist circumference, depressive symptoms, life satisfaction. A two-parameter item response theory model was used to generate a scale of IC at baseline. Logistic regression was used for the prediction of subsequent difficulties, measured by difficulties with ≥1 activities of daily living (ADLs) and ≥1 instrumental activities of daily living (IADLs) at 4 and 8 years after baseline. Competing risk and cox regressions were employed to test prediction of hospital admission and mortality, respectively, over a 14-year follow-up. Results Intrinsic capacity scores were generated for 4,545 individuals aged on average 70.8 years (SD 7.93). Better baseline IC scores were associated with reduced risk of subsequent difficulties with ADLs and IADLs, hospital admission (SHR=0.99, 95%CI 0.98-0.99) and mortality (HR=0.98, 95%CI 0.98–0.99), when adjusted for sociodemographic and health-related covariates. Conclusions These results suggest the utility of this IC score as a measure of risk for future adverse outcomes in older people, potentially above that indicated by other sociodemographic and health-related factors.