Objectives The aim of this study was to assess the nutritional status and functional capacity of 144 community-dwelling elderly in three rural ethnic groups, namely, the Oy, the Brau and the Lao, of southern Laos. Methods The Mini nutritional assessment (MNA) questionnaire and Determine Your Nutritional Health checklist were used to assess nutritional status. The Barthel Activities of Daily Living questionnaire and Lawton and Brody's Instrumental Activities of Daily Living questionnaire were used to assess the functional capacity of the respondents. Results The MNA score results indicated that 92.5 % of Oy respondents, 85.4 % of Brau respondents and 60 % of Lao respondents were malnourished. Analysis of variance tests showed that the MNA scores of the Oy and Lao ethnic groups and of the Brau and Lao ethnic groups were significantly different ( both p \ 0.01), but that there was no significant difference between the MNA scores of the Oy and Brau ethnic groups (p [ 0.05). In terms of functional capacity, 47.2 % of Oy respondents, 43.9 % of Brau respondents and 20 % of Lao respondents had limitations in their activities of daily living, whereas 98.1 % of Oy respondents, 97.6 % of Brau respondents and 86 % of Lao respondents had limitations in their instrumental activities of daily living. Body mass index, reduced appetite, number of meals consumed daily and presence of common diseases predicted nutritional status in all three ethnic groups; the remaining factors differed by ethnicity. This result implies that ethnic differences and other factors, such as location of the village, services, resources within the village and respondents' lifestyles, can affect nutritional status. Conclusions Because predictors of nutritional status varied by ethnicity, there is a need for area-specific interventions aimed at improving the quality of life of the elderly in these areas.