Previous studies examining the relationship between cognition and ability to benefit from inpatient rehabilitation have found cognitive dysfunction to be associated with a poor rehabilitation outcome. To examine whether cognitive dysfunction precluded effective rehabilitation, 52 consecutive admissions to a geriatric rehabilitation unit were assigned Mini Mental State Examination (MMSE) scores. Functional gains were assessed by the change in Functional Independence Measure (FIM) score from admission to discharge. Neither MMSE score alone nor in combination with age was significantly associated with change in FIM (r = 0.10; R = 0.25; P< 0.18). MMSE score alone and in combination with age was correlated with functional status on admission (r = 0.58; R = 0.58; P< 0.0001) and discharge (r = 0.49; R = 0.51; P< 0.0004). Patients evidenced a similar increase in functional status regardless of cognitive ability, but cognitively impaired individuals entered the inpatient unit with a lower functional status, and their level of function at discharge was also impaired relative to cognitively intact cohorts. Low MMSE scores were associated with a greater likelihood of nursing home placement, but a considerable percentage (38%) of individuals with severe cognitive impairment and the majority of individuals with mild to moderate cognitive impairment returned home following discharge. These findings suggest that geriatric patients with cognitive dysfunction should be considered for admission to rehabilitation programs if functional gains will affect quality of life or disposition.