The effects of residence in an acute geriatrics-based ward (AGW) with emphasis on early rehabilitation and discharge planning for older patients with acute medical illnesses were assessed. Outcome and use of resources were compared with those of patients treated in general medical wards (MWs). A per-protocol rather than intention-to-treat analysis was performed. A randomized trial with 3-months follow-up. A total of 190 patients aged 70 years and older were randomized to an acute geriatrics-based ward, and 223 patients were randomized to general medical wards. The two groups were comparable at inclusion. However, after care in the AGW, 71% of patients could be discharged directly home compared with 64% of those treated in MWs (relative risk 1.17; 95% CI, 0.93-1.49). The length of stay was shorter in the AGW (mean 5.9 vs 7.3 days; P = .002). The proportion of patients in geriatric or other hospital wards or in nursing homes did not differ, but the proportion of AGW patients in sheltered living tended to be lower (P = .085). At the follow-up, case fatality, ADL function, psychological well-being, need for daily personal assistance, drug consumption, need for readmission to hospital, and total health care costs after discharge did not differ between the two groups. Poor global outcome was observed in 37% of AGW and 34% of MW patients. A geriatric approach with greater emphasis on early rehabilitation and discharge planning in the AGW shortened the length of hospital stay and may have reduced the need for long-term institutional living. This occurred despite patients in an acute geriatric ward not having better medical or functional outcome than older acute patients treated in general medical wards.