Objective: As there is little understanding of disability processes in Taiwanese elders, the present study aimed to identify medical predictors of the incidence of activities of daily living (ADL) disability. Method: A total of 903 subjects were studied over a 4‐year period (1994–1998). The measurement instrument was the Chinese‐version Multidimensional Functional Assessment Questionnaire (CMFAQ). Only the subjects free of ADL disability at baseline were included in separate logistic regression models to predict disability in physical and instrumental ADL. Results: The hypothesised associations between chronic conditions and future functional disability were cross‐nationally confirmed. Arthritis, diabetes and hypertension were significantly predictive of the onset of physical ADL (PADL) disability; diabetes was the only medical predictor of instrumental ADL (IADL) disability. Age and educational level were significant predictors of PADL and IADL. Conclusions: Prevention programs for chronic disease need to pay more attention not only to the disabled population, but also to secondary prevention among those elders who have higher medical risk of developing disability.