Prevention of disability in late life has become a major public health concern, a key area of ageing research, and also an important target for the development of effective interventions. The increase in life expectancy and the resulting growth of the elderly population are also thought to be driving up the number of elderly people with disabilities. Despite the message that regular moderate physical activity has substantial health benefits even in very old age, older people remain largely sedentary. The most popular theoretical model for researching the development of disability is the disablement process, which is widely used, in the gerontological literature. The main pathway according to this model leads from diseases and injuries to impairments, functional limitations, and disability. This approach has been challenged most particularly by models, which emphasize the social construction and determinants of disability. Numerous physical exercise interventions have aimed at preventing impairments, functional limitations and disability, and at promoting independent living in late life. A review of the results of these interventions shows that exercise can indeed be effective in preventing impairments and functional limitations, but the evidence regarding the prevention of disability and dependency is inconclusive. The inconsistency of the results is related to differences in research models and approaches, cultural and other differences between the populations studied, and variability in research designs and methods, including definitions of key variables. In the future, research-addressing disability in late life needs to focus on the dynamic interactions between individuals and their social, physical, and cultural environment. Furthermore, randomized trials that are larger and longer than most existing studies of physical activity need to be conducted. Additional evidence can also be obtained by well-conducted observational studies focusing on the prevention of progressive disability related to chronic conditions. One of the key areas of development is in improving the definition of both independent (physical activity and exercise) and outcome (functional limitations, disability) variables. A further challenge is presented by the investigation of dose-response relationships, including both beneficial and possible adverse effects of exercise.