To examine the relationship between diabetes and impairments in functional and cognitive status as well as depression in older people. Cross-sectional study. Elderly Health Centres (EHC) in Hong Kong. 66,813 older people receiving baseline assessment at EHC in 1998 to 2001. Diabetes status was defined by self-report and blood glucose tests. Functional status was assessed by 5 items of instrumental activities of daily living (IADL) and 7 items of activities of daily living (ADL). Cognitive status was screened by the Abbreviated Mental Test-Hong Kong version (AMT). Depressive symptoms were screened by the Geriatric Depression Scale-Chinese version (GDS). Among the subjects, 10.4% reported having regular treatment for diabetes, 3.4% had diabetes but were not receiving regular treatment, and 86.2% did not have diabetes. After controlling for age, sex and education level, those having regular treatment for diabetes were 1.7 times more likely (OR=1.65, 95% CI: 1.51-1.80) to have functional impairment, 1.3 times more likely (OR=1.28, 95% CI: 1.11-1.48) to have cognitive impairment and 1.3 times more likely (OR=1.35, 95% CI: 1.25-1.46) to have depression, than older people without diabetes. Older people with diabetes may be less capable of managing the disease than the younger ones as a result of increased risk of both physical and cognitive impairment. This study provided further evidence for the need of an international consensus statement regarding care of diabetes in older people.