To investigate the role of neurological abnormalities and magnetic resonance imaging (MRI) lesions in predicting global functional decline in a cohort of initially independent-living elderly subjects. The Leukoaraiosis And DISability (LADIS) Study, involving 11 European centres, was primarily aimed at evaluating age-related white matter changes (ARWMC) as an independent predictor of the transition to disability (according to Instrumental Activities of Daily Living scale) or death in independent elderly subjects that were followed up for 3 years. At baseline, a standardized neurological examination was performed. MRI assessment included age-related white matter changes (ARWMC) grading (mild, moderate, severe according to the Fazekas' scale), count of lacunar and non-lacunar infarcts, and global atrophy rating. Of the 633 (out of the 639 enrolled) patients with follow-up information (mean age 74.1 ± 5.0 years, 45 % males), 327 (51.7 %) presented at the initial visit with ≥1 neurological abnormality and 242 (38 %) reached the main study outcome. Cox regression analyses, adjusting for MRI features and other determinants of functional decline, showed that the baseline presence of any neurological abnormality independently predicted transition to disability or death [HR (95 % CI) 1.53 (1.01-2.34)]. The hazard increased with increasing number of abnormalities. Among MRI lesions, only ARWMC of severe grade independently predicted disability or death [HR (95 % CI) 2.18 (1.37-3.48)]. In our cohort, presence and number of neurological examination abnormalities predicted global functional decline independent of MRI lesions typical of the aging brain and other determinants of disability in the elderly. Systematically checking for neurological examination abnormalities in older patients may be cost-effective in identifying those at risk of functional decline.