Age‐related bone loss is common in older adults. However, the association of low bone mass with incident disability and mortality is not well established. A sample of 738 participants in the Rush Memory and Aging Project (MAP) was evaluated at baseline for bone mineral density (BMD) using quantitative ultrasound at the calcaneus. An annual interview assessed basic activities of daily living (BADL), instrumental activities of daily living (IADL), mobility disability, and history of hip fracture. The associations between baseline BMD and risk of death; incident BADL, IADL, and mobility disability; and hip fracture were investigated using Cox hazard models, adjusting for age, sex, education, race, and body mass index (BMI). The robustness of our findings was evaluated by adjusting for confounding factors and health conditions including joint pain, musculoskeletal medications, smoking status, motor function, global cognition, falls, cardiovascular events, and diabetes. Participants were on average (mean ± SD) 80.9 ± 7.0 years old, 72% female, and 3.8% black, with a baseline BMI of 27.3 ± 5.4 kg/m2, and a baseline of BMD of 0.44 ± 0.14 g/cm2. In models adjusted for age, sex, education, race, and BMI, lower BMD was associated with a higher rate of death (hazard ratio [HR] 1.20; 95% confidence interval [CI], 1.08–1.33), incident BADL disability (HR 1.20; 95% CI, 1.05–1.37), and hip fracture (HR 2.57; 95% CI, 1.72–3.82), but not of IADL disability (HR 1.00; 95% CI, 0.85–1.17) or mobility disability (HR 1.13; 95% CI, 0.97–1.32). The association between BMD and mortality was not significant in fully adjusted models, but the BMD and BADL associations remained significant in models adjusting for both demographic variables and BMD‐modifying health conditions. BMD is associated with incident disability in older adults. © 2020 The Authors. JBMR Plus published by Wiley Periodicals LLC on behalf of American Society for Bone and Mineral Research.