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Arthritis is a common chronic condition in the ageing population. Its impact on physical function varies according to sociodemographic and race/ethnic factors. The study objective was to examine the impact of arthritis on physical function and disability among non-disabled older Mexican Americans over time. A 23-year prospective cohort study of 2230 Mexican Americans aged 65 years and older from the Hispanic Established Population for the Epidemiologic Study of the Elderly (1993/94–2016). The independent variable was self-reported physician-diagnosed arthritis, and the outcomes included Activities of Daily Living (ADL), Instrumental Activities of Daily Living (IADL), mobility, Short Physical Performance Battery (SPPB), and handgrip strength. Covariates were sociodemographic, medical conditions, body mass index, depressive symptoms, and cognitive function. General linear mixed models were performed to estimate the change in SPPB and muscle strength. General Equation Estimation models estimated the odds ratios (OR) of becoming ADL- or IADL- or mobility – disabled as a function of arthritis. All variables were used as time-varying except for sex, education, and nativity. Overall, participants with arthritis had higher odds ratio (OR) of any ADL [OR = 1.35, 95% Confidence Interval (CI) = 1.09–1.68] and mobility (OR = 1.34, 95% CI = 1.18–1.52) disability over time than those without arthritis, after controlling for all covariates. Women, but not men, reporting arthritis had increased risk for ADL and mobility disability. The total SPPB score declined 0.18 points per year among those with arthritis than those without arthritis, after controlling for all covariates (p-value <.010). Our study demonstrates the independent effect of arthritis in increasing ADL and mobility disability and decreased physical function in older Mexican Americans over 23-years of follow-up. [ABSTRACT FROM AUTHOR]