OBJECTIVES: To evaluate the effect of blood pressure (BP) and diabetes mellitus (DM) on cognitive and physical performance in older, independent-living adults. DESIGN: Longitudinal study with secondary data analysis from the Advanced Cognitive Training for Independent and Vital Elderly randomized intervention trial. SETTING: Six field sites in the United States. PARTICIPANTS: Two thousand eight hundred two independent-living subjects aged 65 to 94. MEASUREMENTS: Cognitive functions in different domains and physical functions measured using activities of daily living, instrumental activities of daily living (IADLs), and the physical function subscale from the Medical Outcomes Study Short Form-36 (SF-36) Health Survey. RESULTS: After the first annual examination, hypertension was associated with a faster decline in performance on logical reasoning tasks (ability to solve problems following a serial pattern), whereas DM was associated with accelerated decline on the Digit Symbol Substitution Test (speed of processing). The reasoning and Digit Symbol Substitution test are executive function tasks thought to be related to frontal-lobe function. Hypertension and DM were associated with a significantly faster pace of decline on the SF- 36 physical function component score. Individuals with DM had a faster pace of decline in IADL functioning than nondiabetic subjects. There was no evidence for an interaction between BP and DM on cognitive or physical function decline. CONCLUSION: Hypertension and DM are associated with accelerated decline in executive measures and physical function in independent-living elderly subjects. Further research is needed to determine whether cardiovascular risk modification ameliorates cognitive and functional decline in elderly people.