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Introduction: Functional status decline is related to many negative outcomes., Objective: To explore the relationship of sociodemographic, medical, and psychological factors with the incidence of functional status decline in Mexican older adults., Materials and Methods: Data from the 2012 and 2015 waves of the Mexican Health and Aging Study (MHAS) survey were analyzed. Participants with previous functional status decline at baseline were excluded. We assessed functional status decline individually with activities of daily living (ADL) and instrumental ADL (IADLs) in an individual way., Results: Age was associated with functional limitations in ADL. Being male had an association with limitations for IADL. A poor financial situation and lower education related to higher limitations for ADL. Furthermore, pain, comorbidities, and depression were found to be independently associated with limitations in ADL. IADL limitation was associated with age, poor education, comorbidities, and depression, as well as cognitive impairment., Conclusions: We found that factors such as age, financial status, educational level, pain, and the number of comorbidities were associated with the incidence of functional status decline. Pain had a greater association in the 3-year functional ADL decline incidence when compared with cognitive impairment. Studying functional decline by domains allowed us to find more detailed information to identify factors susceptible to intervention with the aim to reduce the incidence of functional status decline and dependence.